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3.10 Analysis of Financial Statements—CBSE XII
Illustration 5.
From the following Balance Sheet of XYZ Ltd., calculate:

(i) Debt to Equity Ratio; (ii) Proprietary Ratio, and (iii) Total Assets to Debt Ratio.

BALANCE SHEET OF XYZ LTD. as at 31st March, 2024
Particulars Note No. `
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Equity Share Capital 15,00,000
(b) Reserves and Surplus 3,00,000
2. Non-Current Liabilities
Long-term Borrowings 9,00,000
3. Current Liabilities
(a) Short-term Borrowings 2,00,000
(b) Trade Payables 11,00,000
Total 40,00,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and Intangible Assets:
—Property, Plant and Equipment 16,50,000
(b) Long-term Investments 1,60,000
2. Current Assets
(a) Inventories 9,10,000
(b) Trade Receivables 12,40,000
(c) Cash and Cash Equivalents 40,000
Total 40,00,000
Solution:
Debt (WN 1)
(i) Debt to Equity Ratio =
Equity (Shareholders’ Funds) (WN 2)

` 9,00,000
= = 0.50 : 1.
` 18,00,000
Working Notes:
1. Debt = Long-term Borrowings = ` 9,00,000.
2. Equity (Shareholders’ Funds) = Equity Share Capital + Reserves and Surplus
= ` 15,00,000 + ` 3,00,000 = ` 18,00,000.

Shareholders’ Funds ` 18,00,000
(ii) Proprietary Ratio = = = 0.45 : 1.
Total Assets ` 40,00,000

Total Assets ` 40,00,000
(iii) Total Assets to Debt Ratio = = = 4.44 : 1.
Debt ` 9,00,000