| Equity Share Capital | 75,000 | Debentures | 75,000 |
| Preference Share Capital | 25,000 | Trade Payable | 40,000 |
| General Reserve | 45,000 | Outstanding Expenses | 10,000 |
| Balance in Statement of Profit and Loss | 30,000 |
SOLUTION
Debt to Equity Ratio = Long term Debts / Shareholders’ Funds
Debt to Equity Ratio = Debentures
Equity = Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit & Loss
Debt to Equity Ratio = 75,000 + 75,000 + 25,000 + 45,000 + 30,000
= 0.43: 1
Total Assets to Debt Ratio = Total Assets / Long term Debts
Total Assets to Debt Ratio = Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit & Loss / Debentures Trade Payables + Outstanding Expenses
Debentures Total Assets to Debt Ratio = 75,000 + 25,000 + 45,000 + 30,000 + 75,000 + 40,000 + 10,000 / 75,000
= 4: 1
Proprietary Ratio = Shareholders’ Funds / Total Assets
Proprietary Ratio = Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit & Loss / Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit & Loss + Debentures + Trade Payables + Outstanding Expenses
Proprietary Ratio = 75,000 + 25,000 + 45,000 + 30,000 / 75,000 + 25,000 + 45,000 + 30,000 + 75,000 + 40,000 + 10,000
= 0.58: 1 or 58.33%