Q. 159 DK Goel Accounting Ratios Solutions Class 12 CBSE (2024-25)

the solutions of Question number 159 of Accounting Ratios chapter 5 of DK Goel Class 12 CBSE (2024-25)

Assuming that Debt to Equity Ratio is 0.5 : 1, state, giving reasons whether this ratio will increase or decrease or will have no change in each one of the following cases:

(i) Issue of Preference Shares for Cash.

(ii) Issue of Debentures for Cash.

(iii) Issue of Bonus Shares.

(iv) Repayment of Long term Borrowings.

(v) Conversion of Debentures into Equity Shares.

(vi) Purchase of a Non-Current Asset for Cash.

(vii) Purchase of a Non-Current Asset by taking long-term loan.

(viii) Sale of Non-Current Asset (Book Value ₹ 5,00,000) for ₹ 4,00,000.

(ix) Sale of Non-Current Asset (Book Value ₹ 2,00,000) at a profit of ₹ 50,000.

[Ans. (i) Decrease; (ii) Increase; (iii) No Change; (iv) Decrease; (v) Decrease; (vi) No Change; (vii) Increase; (viii) Increase; (ix) Decrease.]

Solution:-