What is the formula of Debt Equity Ratio? Also define its
importance in a firm.
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Answer / navesh joshi
Debt Equity Ratio = Debt/Equity
Debt= Long term borrowed funds
equity= share capital+ preference share capital +
reserves&surplus - fictitious asset
the importance of this ratio is to judge the long solvency
position of a company and capital structure.
Is This Answer Correct ? | 23 Yes | 0 No |
Answer / rahul sharma
Debt Equity Ratio = Debt/Equity
Debt= Long term borrowed funds
Equity= share capital+ preference share capital +
reserves&surplus - fictitious asset- P&L a/c dr balance.
Is This Answer Correct ? | 4 Yes | 2 No |
Answer / harish
Total Debt/Total Equity
It indicates the financial advantage of the concern(popularly
called leverage).
Is This Answer Correct ? | 2 Yes | 0 No |
Answer / libina kutty
DEBT EQUITY RATIO = DEBT / EQUITY
IT TELLS D TOTAL DEBT OF AN ENTITY TO ITS EQUITY . IT SHOULD
BE IN THE RATIO OF 2:1. WHICH MEANS FR EVRY 2 DEBT 1 EQUITY
SHOULD BE THEIR.
Is This Answer Correct ? | 1 Yes | 0 No |
Answer / saurabh
debt/equity ratio:
debt :(long term debt + short term debt)
equity : (common share + pref share+ reserves and surplus)
it is used to assess the
1)riskiness
2)used by banks to check the existing composition of debt -
should be on the lower side to leave scope for more debt
Is This Answer Correct ? | 1 Yes | 1 No |
Answer / suresh
Debt Equity Radio : Debt/Equity
Debt: Long term Loans, Overdraft , Borrowings
Equity : share Capital and preference share Capital +
Reserve and Surplus - if Any loss
Is This Answer Correct ? | 0 Yes | 3 No |
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ABC Ltd. firm has a sales of Rs.6 crores, Variable cost Rs. 3.5 crores and Fixed cost of Rs. 0.65 crores. The firm has debt and equity resources worth of Rs.7 crores and 10 crores respectively. With the data given show : (i) The firm’s ROI. (ii) EBIT if sales decline to Rs.4 crores. (iii) If the industry’s assets turnover is 4 times, does the firm has high or low asset turnover? The cost of debt is 12%. Ignore taxation.
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