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From The Following, Calculate (A) Debt Equity Ratio (B) Total Assets to Debt Ratio (C) Proprietary Ratio.- ACCOUNTING RATIOS
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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 + 45,000Debentures (Debts) = 75,000Debt 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= 3,00,000Total 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
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Read the following passage. At the shop there was a well-dressed customer. He bent down and asked the little girl, “What kind of a miracle does your brother need? “I don’t know,” she replied with her eyes welling up. “He’s really sick and Mummy says he needs an operation. But my Daddy can’t pay for it, so I have brought my savings.” “How much do you have?” asked the man. “One dollar and eleven cents, but I can try and get some more,” she answered barely audible. Answer the following questions. 1) Who do you think is the ‘well-dressed customer’ at the shop? 2) What did the well-dressed man ask the little girl? 3) “He’s really sick.” Who does title word ‘he’ refer to here ? What is he to Tess? 4) What did he need urgently? 5) How much money did the little girl have with her? SOLUTION 1. I think the well-dressed customer at the shop is Dr. Carlton Armstrong. 2. The well-dressed man asked the little girl what kind of a miracle her brother needed. 3. The word ‘he’ refers to A...
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