Accountancy

Total Debt Rs. 15,00,000; Current Liabilities Rs. 5,00,000; Capital Employed Rs. 15,00,000. Calculate Total Assets to Debt Ratio. 

SOLUTION Total Assets to Debt Ratio =  Total Assets / Long Term DebtCapital Employed = Total Assets – Current Liabilities15,00,000 = Total Assets – 5,00,000Total Assets = Rs. 20,00,000Long Term Debt = Total Debt – Current Liabilities= 15,00,000 – 5,00,000= Rs. 10,00,000Total Assets to Debt Ratio = 20,00,000 /…

Continue ReadingTotal Debt Rs. 15,00,000; Current Liabilities Rs. 5,00,000; Capital Employed Rs. 15,00,000. Calculate Total Assets to Debt Ratio. 

Total Debt Rs. 60,00,000; Shareholders’ Funds Rs. 10,00,000; Reserves and Surplus Rs. 2,50,000; Current Assets Rs. 25,00,000; Working Capital Rs. 5,00,000. Calculate Total Assets to Debt Ratio.

SOLUTION Total Assets to Debt Ratio =  Total Assets Long Term DebtWorking Capital = Current Assets – Current Liabilities5,00,000 = 25,00,000 – Current LiabilitiesCurrent Liabilities = Rs. 20,00,000Long Term Debts = Total Debt – Current Liabilities= 60,00,000 – 20,00,000= Rs. 40,00,000Total Assets…

Continue ReadingTotal Debt Rs. 60,00,000; Shareholders’ Funds Rs. 10,00,000; Reserves and Surplus Rs. 2,50,000; Current Assets Rs. 25,00,000; Working Capital Rs. 5,00,000. Calculate Total Assets to Debt Ratio.

Shareholders’ Funds  Rs. 1,60,000; Total Debts Rs. 3,60,000; Current Liabilities Rs. 40,000. Calculate Total Assets to Debt Ratio.

SOLUTION Total Debts = 3,60,000Shareholders’ Funds = 1,60,000Current Liabilities = 40,000 Total Assets = Total Debts + Shareholders’ Funds= 3,60,000 + 1,60,000= 5,20,000 Long-term Debts = Total Debt − Current Liabilities=…

Continue ReadingShareholders’ Funds  Rs. 1,60,000; Total Debts Rs. 3,60,000; Current Liabilities Rs. 40,000. Calculate Total Assets to Debt Ratio.

From the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio:

Particulars Amount(Rs.)I. EQUITY AND LIABILITIES1. Shareholder's Funds(a) Share Capital:(i) Equity Share Capital - 5,00,000(ii) 10% Preference Share Capital - 5,00,00010,00,000(b) Reserves and Surplus - 2,40,000 2. Non-Current Liabilities Long-term Borrowings (Debentures)2,50,000 3. Current Liabilities :(a)…

Continue ReadingFrom the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio:

Assuming That the Debt-to-Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio: (i) Issue of new shares for cash. (ii) Conversion of debentures into equity shares (iii) Sale of a fixed asset at profit. (iv) Purchase of a fixed asset on long-term deferred payment basis. (v) Payment to creditors.

SOLUTION Let’s take Debt and Equity as Rs. 2,00,000 and Rs. 1,00,000Debt to Equity Ratio = Debt Equity= 2,00,000 / 1,00,000 = 2: 1(i) Issue of new shares for cash (say Rs. 50,000)Debt to Equity Ratio = 2,00,000 / 1,00,000 + 50,000= 1.33: 1…

Continue ReadingAssuming That the Debt-to-Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio: (i) Issue of new shares for cash. (ii) Conversion of debentures into equity shares (iii) Sale of a fixed asset at profit. (iv) Purchase of a fixed asset on long-term deferred payment basis. (v) Payment to creditors.

Debt to Equity Ratio of a company is 0.5:1. Which of the following suggestions would increase, decrease or not change it:

(i) Issue of Equity Shares:(ii) Cash received from debtors:(iii) Redemption of debentures;(iv) Purchased goods on Credit? SOLUTION Debt Equity Ratio = 0.5: 1Let Long- term Loan be = Rs. 5,00,000Shareholders’ Funds = Rs. 10,00,000Debt equity ratio…

Continue ReadingDebt to Equity Ratio of a company is 0.5:1. Which of the following suggestions would increase, decrease or not change it:

Calculate Debt to Equity Ratio from the following information:

Particulars Amount(Rs.)Particulars Amount(Rs.)Fixed Assets (Gross)8,40,000Current Assets3,50,000Accumulated Depreciation1,40,000Current Liabilities2,80,000Non-current Investments14,00010% Long-term Borrowings4,20,000Long-term Loans and Advances56,000Long-term Provisions1,40,000 SOLUTION DebtLong Term Borrowings + Long Term Provisions         4,20,000 + 1,40,000 = Rs. 5,60,000   EquityTotal Assets - Total Debts            (8,40,000 -1,40,000+14,000+56,000+3,50,000) - (4,20,000 -1,40,000 -2,80,000)= Rs. 2,80,000 Debt to Equity RatioDebt / Equity                                   5,60,000 / 2,80,000 = 2:…

Continue ReadingCalculate Debt to Equity Ratio from the following information:

Balance Sheet had the following amounts as at 31st March, 2019:

ParticularsAmount(Rs.)ParticularsAmount(Rs.)10% Preference Share Capital5,00,000Current Assets12,00,000Equity Share Capital15,00,000Current Liabilities8,00,000Securities Premium Reserve1,00,000Investments (in other companies)2,00,000Reserves and Surplus4,00,000Fixed Assets-Cost60,00,000Long-term Loan from IDBI @ 9%30,00,000Depreciation Written off14,00,000 Calculate ratios indicating the Long-term and the…

Continue ReadingBalance Sheet had the following amounts as at 31st March, 2019: