Doubts

SOLUTION Debt-equity ratio will increase because long-term debts are increased but total equity remain unchanged.

SOLUTION  Debt-equity ratio will decrease because long-term loan will decrease but total equity (Shareholder’s funds) will remain unchanged.

SOLUTION Conversion of Debentures into Shares.

SOLUTION It indicates more use of long-term loans in financing total assets of the enterprise.

SOLUTION It will indicate a risky financial position from the long-term point of view, as it indicates that a higher proportion of funds invested in the business is provided by…

SOLUTION Quick ratio will improve as both the liquid assets and current liabilities will decrease by the same amount.

SOLUTION No Change.Reason: It results in increase in one quick asset (debtors) and decrease in other quick asset (bank) with the same amount.

SOLUTION It will have no effect on the quick ratio because neither the total quick assets nor the total current liabilities are effected It is merely a conversion of one…

SOLUTION Liquid ratio will not alter because neither the liquid assets nor the current liabilities are affected. Only one current liability is converted into another current liability.