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Question : Shareholders' Funds Rs. 14,00,000; Total Debts (Liabilities) Rs. 18,00,000; Current Liabilities Rs. 2,00,000. Total Assets to Debt Ratio will be

Option 1: 3:2

Option 2: 2:1

Option 3: 2.5:1

Option 4: None of the above.


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 13th Jan, 2024

Correct Answer: 2:1


Solution : Answer = 2:1

Total assets to debt ratio=$\frac{\text {Total Assets}}{\text {Debt}}$=$\frac{32,00,000}{16,00,000}$=2:1

Total Assets = Share Holder fund + Total debt=14,00,000+18,00,000=32,00,000.
Debt=Total debt-current liabilities=18,00,000-2,00,000=16,00,000.
Hence, the correct option is 2.

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