Question

Calculate Debt Equity Ratio of the company based on the given data:

• A. 2 : 1
• B. 1 : 1
• C. 0.75 : 1
• D. 0.50 : 1

Hint:

Debt Equity Ratio measures financial leverage and risk by comparing debt to equity.

Answer 1

The Correct Option is C

Step 1: Understand the formula 
Debt Equity Ratio \(= \frac{\text{Long-term Debt}}{\text{Shareholder's Fund}}\). 
Step 2: Identify values 
Long-term Debt (Debentures) = \rupee3,00,000 
Shareholder's Fund (Equity) = \rupee4,00,000 
Step 3: Perform the calculation 
\[ \text{Debt Equity Ratio} = \frac{3,00,000}{4,00,000} = 0.75 : 1. \]