Question 34 Chapter 4 of +2-B
Table of Contents
34. (Debt Equity Ratio/Proprietary Ratio/Total Asset to Debt Ratio) From the following information calculate (i) Debt Equity Ratio, (ii) Proprietary Ratio, (iii) Total Asset to Debt Ratio.
| Particulars | ₹ |
| I. Equity and Liabilities | |
| Shareholders’ Funds | |
| Equity Share capital | 3,75,000 |
| Reserve and Surplus | |
| General Reserve | 1,50,000 |
| Non Current Liabilities | |
| Long term Borrowings | |
| 12% Debentures | 1,25,000 |
| Current Liabilities | |
| Short term Borrowings | |
| Bank overdraft | 50,000 |
| Trade Payable | 3,00,000 |
| 10,00,000 | |
| II. Assets | |
| Non Current Assets | |
| Fixed Assets | 4,12,000 |
| Long-term Investments | 40,000 |
| Current Assets | |
| Inventory | 2,27,000 |
| Trade Receivable | 3,10,000 |
| Cash in hand | 10,000 |
| 10,00,000 |
The solution of Question 34 Chapter 4 of +2-B: –
| (i) Debt Equity Ratio | = | Total Long term Debt |
| Shareholder’s Fund |
| Total Long term Debt | = | 12% Debentures |
| = | ₹ 1,25,000 | |
| Shareholder’s Fund | = | Equity share Capital + General Reserve |
| = | ₹ 3,75,000 + ₹ 1,50,000 | |
| = | ₹ 5,25,000 |
| Debt Equity Ratio | = | ₹ 1,25,000 |
| ₹ 5,25,000 | ||
| = | 0.238: 1 |
| (ii) Proprietary Ratio | = | Proprietor’s Funds |
| Total Assets |
| Proprietor’s Funds | = | Equity share Capital + General Reserve |
| = | ₹ 3,75,000 + ₹ 1,50,000 | |
| = | ₹ 5,25,000 | |
| Total Assets | = | Fixed Assets + Long Term Investments + Inventory + Trade Receivable +Cash at Bank |
| = | ₹ 4,12,500 + ₹ 40,000 + ₹ 2,27,500 + ₹ 3,10,000 + ₹ 10,000 | |
| = | ₹ 10,00,000 |
| Debt Equity Ratio | = | ₹ 5,25,000 |
| ₹ 10,00,000 | ||
| = | 0.525: 1 |
| (iii) Total Assets to Debt Ratio | = | Total Assets |
| Long term Debt |
| Total Assets | = | Fixed Assets + Long Term Investments + Inventory + Trade Receivable +Cash at Bank |
| = | ₹ 4,12,500 + ₹ 40,000 + ₹ 2,27,500 + ₹ 3,10,000 + ₹ 10,000 | |
| = | ₹ 10,00,000 | |
| Long term Debt | = | 12% Debentures |
| = | ₹ 1,25,000 |
| (iii) Total Assets to Debt Ratio | = | ₹ 10,00,000 |
| ₹ 1,25,000 | ||
| = | 8: 1 |
Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
