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Capital Employed  Rs.8,00,000; Shareholders’ Funds Rs. 2,00,000. Calculate Debt to Equity Ratio.

SOLUTION

Shareholders’ Funds = 2,00,000
Capital Employed = 8,00,000

Long- Term Debts = Capital Employed − Shareholders’ Funds
= 8,00,000 − 2,00,000
= 6,00,000

Debt equity ratio = Long-term Debt  / equity
= 6,00,000 / 2,00,000
= 3: 1



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