GK
ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
1 : 1
|
|
|
2:1
|
|
|
3:1
|
|
|
4:1
|
Detailed explanation-1: -Satisfactory ratio between Long-term Debts and Shareholder’s Funds reveals how much amount of fixed assets are financed by long-term funds. Usually, total investment in fixed assets must be equal to total long-term funds, i.e. ratio should be 1: 1.
Detailed explanation-2: -The satisfactory ratio between internal and external equity is: A) 1:1.
Detailed explanation-3: -Debt-to-equity (D/E) ratio compares a company’s total liabilities with its shareholder equity and can be used to assess the extent of its reliance on debt. D/E ratios vary by industry and are best used to compare direct competitors or to measure change in the company’s reliance on debt over time.
Detailed explanation-4: -Debt equity ratio is calculated as Total outside liabilities/ Shareholders equity and so it can be said that it is the relationship between outsiders fund and shareholders funds.