Question : Which is the debt-to-equity ratio?
Option 1: Long Term Debts/Shareholder’s Funds
Option 2: Short Term Debts/Equity Capital
Option 3: Shareholder’s Funds/Total Assets
Option 4: Total Assets/Long-term Debts
Correct Answer: Long Term Debts/Shareholder’s Funds
Solution : A financial and liquidity ratio called the debt to equity ratio shows how much debt and equity a company employs. Long-Term Debts/ Shareholder's Fund = Debt-Equity Ratio Hence option 1 is the correct answer.
Question : Which of the following is the proprietary ratio?
Option 1: Shareholder’s Funds/Fixed Assets
Option 2: Shareholder’s Funds/Total Assets
Option 3: Long-term Debts/Shareholder’s Funds
Option 4: Total Assets/Shareholder’s Funds
Question : Which of the following statements is incorrect?
Option 1: Decrease in Long term Debts decreases the Debt-Equity Ratio
Option 2: Increase in Long term Debts,increases the Debt-Equity Ratio
Option 3: Decrease in Shareholder’s Funds increases the Debt-Equity Ratio
Option 4: None of the above
Question : Which of the following statements is false?
Option 1: Long Term Debts = Debentures + Mortgage Loan
Option 2: Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + Capital Reserve + P&L Balance+ long-term debt
Option 3: Total Assets = Non-Current Assets + Current Assets
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