Ratio
This query is : Resolved
20 November 2009
Can we consider Defferred Tax (Credit balance)as Equity for the purpose of calculating Debt Equity Ratio?
20 November 2009
i think DTL not to be consider for calculation of Debt Equity Ratio.
20 November 2009
Deffered tax Liability is simply a defferment of tax liability (i.e. save tax now & pay it later). Therefore, It should not form the part of Equity for the purposes of D/E ratio. Further, you may refer to annual report of Tata Steel also (Audited by Deloitte Haskins & Sells) for the Yr 2008-09 (Page 197)where equity is taken as only Share Cap + Res & Surplus - Misc Exp, irrespective of DTL standing in Balance Sheet.
20 November 2009
Hi again Mala, the answer is no as from accounting view point, it is liability which has already accrued but not yet paid. it is a liability and not equity. regards, CA Shakuntala Chhangani
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