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The 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.

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

SOLUTION

Debt-equity ratio will increase because long-term debts are increased but total equity remain unchanged.


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Previous PostState with reason whether repayment of long-term loan will result in increase, decrease or no change of debt-equity ratio.
Next PostWhat will be the impact of ‘Issue of shares against the purchase of fixed assets’ on a debt equity ratio of 1: 1?

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