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State with reason whether repayment of long-term loan will result in increase, decrease or no change of debt-equity ratio.

  • Post category:Accountancy
  • Reading time:1 mins read

SOLUTION

 Debt-equity ratio will decrease because long-term loan will decrease but total equity (Shareholder’s funds) will remain unchanged.


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Previous PostState one transaction which results in a decrease in ‘Debt-Equity Ratio’ and no change in ‘Current Ratio’.
Next PostThe debt-equity ratio of a company is 0.8: 1. State whether the long-term loan obtained by the company will increase, decrease or not change the ratio.

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