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Accounting Ratios 3.19
Working Note: ` `
Debt = Long-term Borrowings + Long-term Provisions
2024 = ` 24,00,000 + ` 2,00,000 26,00,000
2023 = ` 8,00,000 + ` 1,00,000 9,00,000
Equity or Shareholders’ Funds = Share Capital + Reserves and Surplus
2024 = ` 10,00,000 + ` 3,00,000 13,00,000
2023 = ` 7,50,000 + ` 2,50,000 10,00,000
Alternatively:
Equity = Non-current Assets + Current Assets – (Non-current Liabilities – Current Liabilities)
2024 = ` 20,00,000 + ` 26,00,000 – ` 24,00,000 – ` 2,00,000 – ` 7,00,000 13,00,000
2023 = ` 11,50,000 + ` 11,00,000 – ` 8,00,000 – ` 1,00,000 – ` 3,50,000 10,00,000

Illustration 14.
Following is the Balance Sheet of Exe Ltd. as at 31st March, 2024. You are required to
calculate Debt to Equity Ratio for the two years.

BALANCE SHEET as at 31st March, 2024
Particulars Note 31st March, 31st March,
No. 2024 (`) 2023 (`)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 10,00,000 7,50,000
(b) Reserves and Surplus 5,00,000 2,50,000
2. Non-Current Liabilities
(a) Long-term Borrowings 8,00,000 4,00,000
(b) Long-term Provisions 2,00,000 1,00,000
3. Current Liabilities
(a) Short-term Borrowings 2,00,000 1,50,000
(b) Trade Payables 3,50,000 1,50,000
(c) Short-term Provisions 1,50,000 50,000
Total 32,00,000 18,50,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets:
—Property, Plant and Equipment 14,00,000 9,50,000
2. Current Assets
(a) Inventories 7,50,000 4,50,000
(b) Trade Receivables 7,50,000 2,50,000
(c) Cash and Cash Equivalents 3,00,000 2,00,000
Total 32,00,000 18,50,000

Solution:
Debt to Equity Ratio 31st March, 2024 31st March, 2023
Debt ` 10,00,000 ` 5,00,000
=  =
Equity (Shareholders’ Funds) ` 15,00,000 ` 10,00,000

= 0.67 : 1 = 0.50 : 1