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 Capital75,000
Preference Share Capital25,000
General Reserve45,000
Balance in the Statement of Profits and Loss30,000
Debentures75,000
Trade Payables40,000
Outstanding Expenses10,000



(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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