Q. 44 Solution of Accounting Ratios Chapter TS Grewal Book Class 12 2021-22
Are you looking for the solution of Question number 44 of the Accounting Ratios of TS Grewal Book 2021-22 Edition for the 2021-22 session?
Question number 44 of the Accounting Ratios chapter is a practical one.
Solution of Question Number 44 of Accounting Ratios Chapter of TS Grewal Book 2021-22 Class 12
Question 44.
Assuming that the Debt to Equity Ratio is 2:1. State giving reasons which of the following transactions would i) increase, ii) Decrease, iii) Not alter.
Debt to Equity Ratio
- Issue of new shares for cash
- Conversion of debentures into equity shares
- Sale of a fixed asset at profit
- Purchase of a fixed asset on long term deferred payment basis.
- Payment to creditors.
Solution:-
| S.N | Situation | Affect | Reason |
| 1. | Issue of new shares for cash | Decrease | only equity will increase. due to increased denominator overall ratio would decrease |
| 2. | Conversion of debentures into equity shares | Decrease | The numerator decreases and the denominator increases with the same amount. due to more increase in denominator overall ratio would decrease |
| 3. | Sale of a fixed asset at a profit | Decrease | Equity would increase by profit. due to an increase in denominator overall ratio would decrease. |
| 4. | Purchase of a fixed asset on long term deferred payment basis. | Increase | Debt would increase. due to increase in numerator overall ratio would increase. |
| 5. | Payment to creditors | No Change | No effect on debt and equity. |
