Roopali Pansari posted an Question
September 01, 2020 • 05:58 am 2 points
  • UGC NET
  • Commerce

Ugc net comm finance

i know the answer is 2nd one.... but i just don't understand the 1 statement.... can u plz ellaborate the 1st one and also the 3rd one..

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    Tripti sharma Best Answer

    The first point means that when debentures are converted into equity shares, the debt decreases because the debentures no more exist and the equity increases with the increase in preference shares, this will automatically decrease the debt equity ratio. The third point is about payment of long term liability, a liability is said to be long term when it is supposed to be paid after one year or more, in this case since the liability no more has one year left for payment it therefore should be considered as current liability in the year of payment.

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