Question 35 Chapter 4 of +2-B

Question 35 Chapter 4 of +2-B

II. Solvency (Long-Term) Ratio

35. (Debt Equity Ratio/Proprietary Ratio) Calculate the following ratios from the balance sheet given below :
(a) Debt equity ratio (b) Proprietary ratio

Particulars
I. Equity and Liabilities 
Shareholders’ Funds 
Equity Share capital2,00,000
Preference Share Capital50,000
Reserve and Surplus50,000
Non Current Liabilities 
Long term Borrowings 
12% Mortgage Loan 2,20,000
10% Debentures80,000
Current Liabilities 
Short term Borrowings  
Bank overdraft50,000
Trade Payable40,000
Outstanding Expenses10,000
 7,00,000
II. Assets 
Non Current Assets 
Tangible Assets  
Fixed Assets5,00,000
Current Assets 
Inventory1,10,000
Trade Receivable60,000
Prepaid Expenses4,000
Cash in hand26,000
 7,00,000

 

The solution of Question 35 Chapter 4 of +2-B: – 

(i) Debt Equity Ratio=Total Long term Debt
Shareholder’s Fund
Total Long term Debt=12% Mortgage Loan + 10% Debentures
 =₹ 2,20,000 + ₹ 80,000
 =₹ 3,00,000
Shareholder’s Fund=Equity share Capital Preference share Capital + Reserves and Surplus
 =₹ 2,00,000 + ₹ 50,000 + ₹ 50,000
 =₹ 3,00,000
Debt Equity Ratio=₹ 3,00,000
₹ 3,00,000
   
 =1: 1

 

(ii) Proprietary Ratio=Proprietor’s Funds
Total Assets
Proprietor’s Funds=Equity share Capital Preference share Capital + Reserves and Surplus
 =₹ 2,00,000 + ₹ 50,000 + ₹ 50,000
 =₹ 3,00,000
Total Assets=Fixed Assets + Inventory + Trade Receivable + Prepaid Expenses +Cash at Bank
 =₹ 5,00,000 + ₹ 1,10,000 + ₹ 60,000 + ₹ 4,000 + ₹ 26,000
 =₹ 7,00,000
Debt Equity Ratio=₹ 3,00,000
₹ 7,00,000
   
 =0.43: 1

 

Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 35 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

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