Ratio Analysis

Financial Management

In the chapter Ratio Analysis, Equity equals equity share capital + preference share capital + reserves. But in the solution of practical sum 7 (pg.no:3.75), why they added preference capital again in total asset computation?

Balaji K

Qualified CA

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04-Aug-22 19:51

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Answers (2)

Equity doesn't include preference share capital. Equity = equity share capital+ reserves , Share capital = equity+ preference capital Capital employed = equity+ preference+ debts(debentures)

Sajeetha R

CA Final

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04-Aug-22 20:24

It's not just Equity. It is Total Assets=Total Liabilities Since, Total Liabilities= ESC + PSC + Debts + CL Therefore, Total Assets= ESC + PSC + Debts + CL

Yug Bhattad

CA Final

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04-Aug-22 21:54