A company has equity capital of Rs. 2,00,000 preference capital of Rs. 1,00,000, 12% debentures of Rs. 1,00,000, long-term loans of Rs. 2,00,000 and short-term loans of Rs. 1,00,000. The capital-gearing ratio will be:

01:01
0.5 : 1
0.4 : 1
None of the above

The correct answer is: B. 0.5 : 1

The capital-gearing ratio is a measure of a company’s financial leverage. It is calculated by dividing the company’s debt by its equity. In this case, the company has debt of Rs. 4,00,000 (Rs. 1,00,000 + Rs. 2,00,000 + Rs. 1,00,000) and equity of Rs. 3,00,000 (Rs. 2,00,000 + Rs. 1,00,000). Therefore, the capital-gearing ratio is 1.33 : 1.

However, the question asks for the capital-gearing ratio in the form of 0 : 1. To convert the ratio to this form, we need to divide the numerator and denominator by 3. This gives us a capital-gearing ratio of 0.4 : 1.

Option A is incorrect because it is the equity-gearing ratio. The equity-gearing ratio is calculated by dividing the company’s equity by its total assets. In this case, the company’s equity is Rs. 3,00,000 and its total assets are Rs. 5,00,000. Therefore, the equity-gearing ratio is 0.6 : 1.

Option C is incorrect because it is the debt-equity ratio. The debt-equity ratio is calculated by dividing the company’s debt by its equity. In this case, the company’s debt is Rs. 4,00,000 and its equity is Rs. 3,00,000. Therefore, the debt-equity ratio is 1.33 : 1.

Option D is incorrect because it is not a valid capital-gearing ratio.