Question : The total assets to debt Ratio is 2.8:1. Capital employed is Rs. 40,00,000 and shareholder fund is Rs. 24,00,000. The value of current liabilities will be
Option 1: Rs.9,60,000
Option 2: Rs.4,80,000
Option 3: Rs.2,40,000
Option 4: Rs.1,20,000
Correct Answer: Rs.4,80,000
Solution : Answer = 4,80,000
Total Assets to DeBT Ratio = Total Assets / DeBT
$\frac{2 \cdot 8}{1}=\frac{\text { Dial Assets }}{1600,000}$
$\begin{aligned} \text { Debt }= & \text { Capital Employed }- \text { Share Holder fund } \\ = & 40,00,000-24,00,000 \\ = & 16,00,000 \\ \text { Total Assets } & =16,00,000 \times 2.8 \\ = & 44,80,000 \\ \text { Total Assets }= & \text { Share Holder fund } \\ & \quad+\text { Total debt }\end{aligned}$
44,80,000 = 24,00,000 + Total Debt
Total Debt = 44,80,000 - 24,00,000
= 20,80,000
Total Debt = Long-term Debt + C. liab
20,80,000 = 16,00,000 + C. liab
C. liab = 20,80,000 - 16,00,000
= 4,80,000 Hence, the correct option is 2.
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
Question : Which of the following statements is incorrect?
Option 1: Working Capital = Current Assets - Current Liabilities
Option 2: Current Liabilities = Total Assets - Non-Current Liabilities - Shareholder's fund
Option 3: Working Capital = Equity Share Capital + Reserves & Surplus - Long Term Loan - Non-Current Assets
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