Hi All,
I hope my question is specific and it is not a repeat question.
From the CA Exam perspective can anyone please tell me which formula should I use in exam if a question comes on DEBT/EQITY Ratio. There are 3-4 formulas available in the books, which are as follows:
1) Long Term Debt/ (Shareholders Funds+ Long Term Debt)
2)Long Term Debt/ Owner's Equities
3) External Equities/ Internal Equities or All Debts/Owner's Funds
Which one should one be using for Financial Management, IPCC exam?
| Originally posted by : Mayank Saini | ||
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Hi All, I hope my question is specific and it is not a repeat question. From the CA Exam perspective can anyone please tell me which formula should I use in exam if a question comes on DEBT/EQITY Ratio. There are 3-4 formulas available in the books, which are as follows: 1) Long Term Debt/ (Shareholders Funds+ Long Term Debt) 2)Long Term Debt/ Owner's Equities 3) External Equities/ Internal Equities or All Debts/Owner's Funds Which one should one be using for Financial Management, IPCC exam? |
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Equity = Comapy Funds which include Share Capital and reserves
Debt = All external obligations like Debentures, loans
All debts/Owner's funds is the most appropriate formula
i am specifying what i have learned at my grad. level & ipcc
DEBT -EQUITY RATIO = LONG TERM FUNDS BORROWED BY THE COMPANY
{ESC +R&S-ME +PSC} SHAREHOLDERS FUND
i am specifying what i have learned at my grad. level & ipcc
DEBT -EQUITY RATIO = LONG TERM FUNDS BORROWED BY THE COMPANY
{ESC +R&S-ME +PSC} SHAREHOLDERS FUND
& IF IN EXAM ,QUESTION SPECIFICALLY PROVIDES ANY DIFFERENT RATIO e.g D/E RATIO =DEBT / (DEBT + EQUITY)
THEN USE THE GIVEN RATIO
CAclubindia
