On the basis of following data, a Company’s Total Assets-Debt Ratio will be: Working Capital ₹2,70,000; Current Liabilities ₹30,000; Fixed Assets ₹4,00,000; Debentures ₹2,00,000; Long Term Bank Loan ₹80,000.a.0.37b.0.7c.0.45d.0.4
Question
On the basis of following data, a Company’s Total Assets-Debt Ratio will be: Working Capital ₹2,70,000; Current Liabilities ₹30,000; Fixed Assets ₹4,00,000; Debentures ₹2,00,000; Long Term Bank Loan ₹80,000.a.0.37b.0.7c.0.45d.0.4
Solution
To calculate the Total Assets-Debt Ratio, we need to find the total assets and total debt of the company.
Total assets can be calculated by adding the working capital and fixed assets. In this case, the working capital is ₹2,70,000 and the fixed assets are ₹4,00,000. So, the total assets would be ₹2,70,000 + ₹4,00,000 = ₹6,70,000.
Total debt can be calculated by adding the current liabilities, debentures, and long-term bank loan. In this case, the current liabilities are ₹30,000, the debentures are ₹2,00,000, and the long-term bank loan is ₹80,000. So, the total debt would be ₹30,000 + ₹2,00,000 + ₹80,000 = ₹3,10,000.
Now, we can calculate the Total Assets-Debt Ratio by dividing the total assets by the total debt. In this case, the Total Assets-Debt Ratio would be ₹6,70,000 / ₹3,10,000 = 2.16.
Since none of the given options match the calculated ratio of 2.16, none of the options (a. 0.37, b. 0.7, c. 0.45, d. 0.4) are correct.
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