Q. 48. Assuming that the Debt to Equity Ratio is 2 : 1, State, giving reasons, which of the following transactions would (i) Increase, (ii) Decrease, (iii) Not alter Debt to Equity RAtio:
(i) Issue of new shares for cash.
(ii) Conversion of debentures into equity shares.
(iii) Sale of a fixed asset at profit.
(iv) Purchase of a fixed asset on long-term deferred payment basis.
(v) Payment to creditors.
[Ans.: (i) Decrease; (ii) Decrease; (iii) Decrease; (iv) Increase; (v) No change.]
Solution:-
