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Introduction to Financial Markets (405) — CBSE Class 10 board question

Q1. [1] § (II) Leverage/Capital structure Ratios
Which of the following is the formula of Debt-Equity ?
  1. (A) Total Debt/Total Equity
  2. (B) Total Debt/Total Assets
  3. (C) Net Sales/Net Fixed Assets
  4. (D) Current Assets/Current Liability
Previously asked in CBSE board exam
2025 92 Q3 (vi)
Generated by claude-sonnet-4-6 · 2026-06-15 07:07 · grounding rag
Model Answer

(A) Total Debt/Total Equity

The formula for Debt-Equity Ratio is: $\text{Debt-Equity Ratio} = \dfrac{\text{Total Debt}}{\text{Total Equity}}$

Source: Leverage/Capital Structure Ratios, Chapter 10

Explanation

The examiner expects direct identification of the correct option. Debt-Equity Ratio measures relative contributions of creditors and owners. Option (B) is Debt-Asset Ratio, (C) is Fixed Assets Turnover, and (D) is Current Ratio — common distractors students must distinguish.

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