If debt is ₹ 220, cash balance is ₹ 20 and equity is ₹ 300, then the gearing ratio is
Net Debt equals Total Debt (Rs. 220) minus Cash Balance (Rs. 20) = Rs. 200, and Total Capital Employed equals Net Debt (Rs. 200) plus Equity (Rs. 300) = Rs. 500. Therefore,…
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If debt is ₹ 220, cash balance is ₹ 20 and equity is ₹ 300, then the gearing ratio is
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Correct answer B
Net Debt equals Total Debt (Rs. 220) minus Cash Balance (Rs. 20) = Rs. 200, and Total Capital Employed equals Net Debt (Rs. 200) plus Equity (Rs. 300) = Rs. 500. Therefore, the Net Gearing Ratio is Rs. 200 / Rs. 500 = '40%'.
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UGC NET Commerce