formula.pptx Debt equity ratio in financial accounting

Formulae

1. Debt-equity ratio =Outsiders funds / shareholders’ fund or External equities/internal equities outsiders funds = all debts/liabilities to outsiders (long term & short term)+ debenture bonds, mortgages or bills Shareholders fund = equity share capital+ preference share capital+ capital reserves + revenue reserves and reserves (accumulated profits like contingencies, sinking funds etc )

2. Funded debt to Total capitalization ratio = funded debt (Long term debt)/ total capitalization*100 Funded debt = debentures + mortgage loans+ bonds+ other long-term Total capitalization = Equity share capital + preference share capital+ Reserve and surplus+ undistributed reserve + debentures+ mortgage loans+ bonds+ other long-term

3. Proprietary ratio = shareholders funds/ total assets Shareholders fund = equity share capital+ preference share capital+ capital reserves + revenue reserves and reserves (accumulated profits like contingencies, sinking funds etc )

4. Solvency Ratio Total liabilities to outsiders / Total assets outsiders funds = all debts/liabilities to outsiders (long term & short term)+ debenture bonds, mortgages or bills

5. Fixed assets to net worth ratio Fixed Assets( after depreciation) / shareholders funds

6. Fixed assets to total long term funds or Fixed assets Ratio Fixed assets (after depreciation) / Total long term funds

7. Current assets to proprietors funds Current assets / shareholder funds*100

8. 8.Debt service ratio or interest coverage ratio Net profit(before interest and taxes) / fixed interest charges 9.Total coverage or fixed charge coverage = Net profit(before interest and taxes) /Total fixed charges 10.preference dividend coverage ratio= Net profit(after interest and taxes) /preference dividend