Lesson eLearning

Veda Pvt. Ltd has long-term debt of Rs.1,20,000 and shareholders' equity of Rs.3,00,000. The debt to equity ratio is: (a) 0.4 (b) 0.5 (c) 0.7 (d) 1.0

hard MCQ 5 marks Class 12 · Accountancy · Accounting Ratios
  1. 0.4
  2. 0.5
  3. 0.7
  4. 1.0
Answer
0.4

The correct answer is 0.4 — Therefore the debt‑to‑equity ratio is 0.4.

Step-by-step solution

  1. Identify debt (1,20,000) and equity (3,00,000).
  2. Compute ratio: .
  3. Match the value with the options – it is option (a).
  4. Therefore the debt‑to‑equity ratio is 0.4.
Common mistake: Reversing numerator and denominator

Concept tested: Solvency ratio – debt to equity

Published · How this solution was prepared and checked

← All Accounting Ratios questions