The correct answer is: C. 5.6 : 1
Debt-equity ratio is a measure of a company’s financial leverage. It is calculated by dividing the company’s total debt by its total equity. A high debt-equity ratio indicates that a company is using a lot of debt to finance its operations. This can be risky, as it means that the company is more likely to go bankrupt if it is unable to repay its debts.
In this case, the company has total debt of Rs. 5,00,000 and total equity of Rs. 25,000,000. This gives a debt-equity ratio of 5.6 : 1. This is a relatively high debt-equity ratio, which indicates that the company is using a lot of debt to finance its operations.
Option A is incorrect because it is the equity-debt ratio, not the debt-equity ratio. The equity-debt ratio is calculated by dividing the company’s total equity by its total debt. A high equity-debt ratio indicates that a company is using a lot of equity to finance its operations. This is generally considered to be a safer financial position than using a lot of debt.
Option B is incorrect because it is the debt-to-asset ratio, not the debt-equity ratio. The debt-to-asset ratio is calculated by dividing the company’s total debt by its total assets. A high debt-to-asset ratio indicates that a company is using a lot of debt to finance its operations. This can be risky, as it means that the company is more likely to go bankrupt if it is unable to repay its debts.
Option D is incorrect because it is not a valid debt-equity ratio.