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Question : Shareholder fund Rs.14,00,000. Total debt Rs.16,00,000 and current liabilities Rs.4,00,000. The total assets-to-debt ratio will be

Option 1: 2:1

Option 2: 2.5:1

Option 3: 1:1

Option 4: None of the above


Team Careers360 16th Jan, 2024
Answer (1)
Team Careers360 19th Jan, 2024

Correct Answer: 2.5:1


Solution : Answer - 2.5:1

Total Assets to 

Debt Ratio = Total Assets / Debt

                    = 30,00,000/ 12,00,000 =10/4 = 2.5:1

Total Assets = Share Holder fund + Total Debt

                     = 14,00,000 +16,00,000

                     = 30,00,000

         Debt   = Total Debt - Current liabilities

                     = 16,00,000 - 4,00,000

                     = 12,00,000
Hence, the correct option is 2.

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