444 Spring 2022 Paper Solution-Question 3-AIOU-Bcom-Advance Accounting
Question 3
From the following data of equity and Debt of Salman Industries, calculate the:
a. Debt-Equity ratio
b. Proprietary ratio
Question 3
From the following data of equity and Debt of Salman Industries, calculate the:
a. Debt-Equity ratio
b. Proprietary ratio
Category
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LearningTranscript
00:00bismillah hir rahman ir raheem
00:02assalamualaikum dear students and viewers
00:04welcome to my youtube channel dgdynapoints
00:06in today's video tutorial
00:08advanced pointing which subject is 444
00:10which is also related to com
00:12and this is a part of
00:14AIOU examination system
00:16so this is our question
00:18question number 3
00:20exam spring 2020
00:22we will solve question number 3 of AIOU paper
00:30so let's read out
00:32from the following data
00:34not from
00:36sorry
00:38from the following data of equity
00:40and debt of salman industries calculated
00:42the debt equity ratio
00:44and propriety ratio
00:46the data is given in the form
00:48of this table
00:50equity share capital
00:521.1 million
00:541100000
00:56capital reserve is
00:58500000 profit and loss count 200
01:00it means it is profit
01:0260%
01:04debentures 500000
01:06100 creditors 240000
01:08bills payable
01:10120000 provenience for taxation
01:12180000 outstanding creditors
01:14160000
01:16so let's move to the solution of
01:18part 1
01:20before enter into the solution of part 1
01:22I am going to discuss something and
01:24share some information
01:26regarding the equity and debt
01:28so you can
01:30understand it easily after
01:32understanding this
01:34concept of debt
01:36to equity or equity
01:38and debt related
01:40information
01:42so let's
01:44suppose we have
01:46a terminology capital employed
01:48is equal to share capital plus capital reserve
01:50capital reserve is that part of
01:52the equity
01:54which has been reserved for the
01:56long term
01:58expenses or long term expenditures
02:00to complete a
02:02long term project of the business
02:04plus profit and loss
02:06if profit then plus
02:08loss then we are going to
02:10subtract it and the fictitious
02:12asset will also subtract from it
02:14fictitious assets they are
02:16intangible in nature
02:18therefore remaining expenditure with no
02:20resale value which is
02:22intangible
02:24intangible so
02:26plus preference shares capital
02:28plus long term loan and
02:30dependents you have clearly seen
02:32that I have separated
02:34the
02:36right hand side of the
02:38equation into two colors one is
02:40blue color and the last one
02:42is the green color
02:44so all the portion which is
02:46colored in blue
02:48are part of the equity
02:50shareholder and
02:52the green part
02:54is related to the long term ratio
02:56why I am going to do this
02:58it is done by
03:00me to show you the
03:02clear picture of regarding the
03:04equity share funds
03:06and debt funds
03:08so all blue portion
03:10is equity share and
03:12this last term which is
03:14in green is our debt
03:16total debt remember that in total
03:18debt we do not include the
03:20liabilities of the
03:22current portion of the balance sheet
03:24we only handle the
03:26long term loans or dependents
03:28so look at this in the
03:30table
03:32in the table there is 60% dependents
03:34and there are
03:36no other
03:38long term loans which may be taken from the other banks
03:40and dependents means
03:42in the business
03:44Salman Rushdie has issued
03:46dependents to acquire
03:48the loan from the paper not from
03:50the financial institutions
03:52so this is why we are
03:54going to 60% dependents
03:56and there is
03:58some long term loans which
04:00may be from dependents or which
04:02may be from financial institutions
04:04such as
04:06commercial banks
04:08investment banks etc
04:10so I have already
04:12mentioned this right hand side blue portion
04:14and debt includes short term and long term
04:16includes
04:18sorry this is not the portion of
04:20this
04:22I have written this
04:24so long term dependents
04:2660% is equal to 500,000 equity
04:28is this equity share
04:30700,000
04:32plus
04:34200,000
04:36plus profit and loss
04:38200,000 is equal to
04:401700,000
04:42or 1.7 million
04:44now come to debt
04:46equity ratio is equal to
04:48500,000 divided by
04:501.7 million
04:52or 17,000
04:541700,000 is equal to
04:560.2941
04:58now come to part b
05:00property ratio is equal to
05:02total assets so we have
05:04the portion equity but we have
05:06no information total assets
05:08because you look at the
05:10information given in the table
05:12all the inputs in the
05:14table are belong to the
05:16long term and short term
05:18liabilities of the Salman
05:20and there is no any information
05:22regarding the assets
05:24side of the balance sheet so
05:26we don't have in my opinion
05:28information regarding the
05:30total assets or assets
05:32so in the absence of this
05:34information I cannot
05:36find the property ratio
05:38I hope you will find this session useful
05:40if you find any
05:42mistake regarding
05:44calculation please correct
05:46in comment section or if you want to
05:48add something more from your
05:50side to make it more
05:52better solution so
05:54drop your suggestions
05:56and advise in comment section
05:58thanks for watching
06:00until now