From the following information calculate capital gearing ratio: Balan

1.	From the following information calculate capital gearing ratio: Balance Sheet (Extract) as on 31.03.2018
Answer» Capital gearng ratio = (Funds bearing fixed interest or fixed dividend)/(Equity shareholders funds) Capital gearing ratio = 0.5 : 1 = 4,00,000/8,00,000 Funds bearing fixed interest and dividend = Preference share capital + Debentures = 1,00,000 + 3,00,000 = 4,00,000 Equity shareholder’s funds = Equity share capital + General reserve + Surplus = 4,00,000 + 2,50,000 + 1,5,000 = 8,00,000

From the following information calculate capital gearing ratio: Balance Sheet (Extract) as on 31.03.2018

Answer»

Capital gearng ratio = (Funds bearing fixed interest or fixed dividend)/(Equity shareholders funds)

Capital gearing ratio = 0.5 : 1

= 4,00,000/8,00,000

Funds bearing fixed interest and dividend = Preference share capital + Debentures

= 1,00,000 + 3,00,000

= 4,00,000

Equity shareholder’s funds = Equity share capital + General reserve + Surplus

= 4,00,000 + 2,50,000 + 1,5,000

= 8,00,000