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Debt Equity Ratio Help

Take Your Pants Off · 2015-03-08 22:56:14

How would I calculate this, I kow its long term debt divided by ordinary share capital+reserves, but in the given information I only have reserves. This is what I am given. current assets 17,000 current liablities(now I believe that would come in the formula as that is something the business has borrowed) 6,100 closing…

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08-03-2015 11:56pm

#1

Take Your Pants Off

Registered Users Posts: 1,514 ✭✭✭

Join Date: August 2013

Posts: 1256

How would I calculate this, I kow its long term debt divided by ordinary share capital+reserves, but in the given information I only have reserves.

This is what I am given.
current assets 17,000
current liablities(now I believe that would come in the formula as that is something the business has borrowed) 6,100
closing stock 9,700
net profit 18,300
retained earnings(reserves) 18,000
gross profit 44,100
sales 159,000
equity share capital 106,000

now when I do this calculation I get 0.35, but is that a bit too less and unrealistic ...?

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#2 17-03-2015 1:16am
RoRo979

Registered Users Posts: 476 ✭✭

Join Date: April 2012

Posts: 430

answer is perfect, just say that they are lowly geared and the benefits of this

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