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CA. Mala Rohara (Querist)
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20 November 2009 Can we consider Defferred Tax (Credit balance)as Equity for the purpose of calculating Debt Equity Ratio?

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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20 November 2009 i think DTL not to be consider for calculation of Debt Equity Ratio.

CA. Rishabh Mittal

CA. Rishabh Mittal (Expert)
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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.

shakuntala chhangani

shakuntala chhangani (Expert)
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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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