Calculate Debt to Equity Ratio: Equity Share Capital Rs. 5,00,000; General Reserve Rs. 90,000; Accumulated Profits Rs. 50,000; 10% Debentures Rs. 1,30,000; Current Liabilities Rs. 1,00,000.

SOLUTION

Equity = Equity Share Capital + General Reserve + Accumulated Profits
= 5,00,000 + 90,000 + 50,000
= 6,40,000

Debt = 10% Debentures
= 1,30,000
Debt equity ratio = Debt / equity
= 1,30,000 / 6,40,000
= 0.203