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4) From the following, calculate the debt-equity ratio: Equity Shares Capital RO 100,000 General Reserve RO 45,000 Accumulated Profits RO 30,000 Debentures RO 75,000 Sundry creditors RO 40,000 Outstanding expenses RO 10,000 5
4) From the following, calculate the debt-equity ratio: Equity Shares Capital RO 100,000 General Reserve RO 45,000 Accumulated Profits RO 30,000 Debentures RO 75,000 Sundry creditors RO 40,000 Outstanding expenses RO 10,000 5. From the following, calculate the debt-equity ratio: Equity Shares Capital RO 200,000 General Reserve RO 50,000 Accumulated Loss RO 20,000 Debentures RO 80,000 Sundry creditors RO 35,000 Outstanding expenses RO 20,000 Preference Share capital RO 100,000
Expert Solution
Answer:
4)
Debt equity ratio = Debt / equity
Debt = debentures = RO 75000
Equity or equity share holders funds = Equity share capital + general reserve + accumulate profit
= RO 100000 + RO 45000 + RO 30000
= RO 175000
Debt-Equity ratio = RO 75000 / RO 175000
= 0.4285 rounded off to 0.43
Debt-equity ratio is 0.43
5)
Debt equity ratio = Debt / equity
Debt = debentures = RO 80000
Equity or equity share holders funds
= Equity share capital + preference share capital + general reserve – accumulated loss
= RO 200000 + RO 100000 + RO 50000 – RO 20000
= RO 330000
Debt-Equity ratio = RO 80000 / RO 330000
= 0.2424 rounded off to 0.24
Debt-equity ratio is 0.24
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