From The Following, Calculate (A) Debt Equity Ratio (B) Total Assets to Debt Ratio (C) Proprietary Ratio.- ACCOUNTING RATIOS

From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.

	Rs.
Equity Share Capital	75,000
Preference Share Capital	25,000
General Reserve	45,000
Balance in the Statement of Profits and Loss	30,000
Debentures	75,000
Trade Payables	40,000
Outstanding Expenses	10,000

(a) Debt Equity Ratio = `\frac{Debt}{Equity }`

Equity Share Holders Fund = Equity Share Capital + Preference Share Capital +  Accumulated Profit +General Reserve 

= 75,000 + 25,000 + 30,000 + 45,000

Debentures (Debts) = 75,000

Debt Equity Ratio = `\frac{75,000}{1,75,000 }`

                             = `\frac{3}{7 }`

                             = 0.43 : 1

(b) Total Assets to debt Ratio =  `\frac{Total Asset}{Debt }`

Total Assets = Equity Share Capital + Preference share Capital + General Reserve + Accumulated Profits + Debentures + Sundry Creditors + Outstanding Expenses

= 75,000 + 25,000 + 45,000 + 30,000 + 75,000 + 40,000 + 10,000

= 3,00,000

Total Assets to Debt Ratio = `\frac{Share Holder Fund}{Net Asset }`

Proprietary Ratio = `\frac{1,75,000}{3,00,000 }`

                            = `\frac{7}{12 }` = 7 : 12 = 0.58 : 1

Chapter-5 Accounting Ratios-II

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