Practice Total Assets To Debt Ratio (1.4.2.2) - Ratio Analysis - ICSE 12 Accounts

Practice: Total Assets to Debt Ratio

Lesson 1.4.2.2Ratio Analysis

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6 sample questions

Question 1.
What does the Total Assets to Debt Ratio measure?
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Think about the relationship between assets and liabilities.
Question 2.
How would you calculate the Total Assets to Debt Ratio?
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Remember the formula: Total Assets ÷ Long-Term Debt.
3Question 3.
What does a Total Assets to Debt Ratio of less than 1 imply?
- The company has more assets than liabilities
- The company has more liabilities than assets
- The company is financially stable
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Remember what the ratio represents about the balance of assets and liabilities.
4Question 4.
True or False: A higher Total Assets to Debt Ratio means a company is at higher financial risk.
- True
- False
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Consider the meaning of having more assets in relation to debt.
Question 5.
A company has total assets worth ₹800,000 and long-term debt of ₹300,000. Discuss what this ratio indicates for long-term investors.
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Consider how the ratio reflects the company's capability to manage its debts.
Question 6.
If another company has a Total Assets to Debt Ratio of 0.8 and is facing declining revenues, what might investors consider regarding future investment?
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Think about how ratios interact with a company's performance over time.

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