Gce Model Questions Vol1 2021 Financial Accounting Question 46

Company XYZ's trial balance at 31 December shows the following items (all figures in £): Sales \(500{,}000\); Purchases \(300{,}000\); Opening stock \(40{,}000\); Closing stock \(55{,}000\); Operating expenses \(70{,}000\); Interest expense \(10{,}000\); Tax expense \(15{,}000\); Depreciation charged on plant \(20{,}000\) (straight‑line, 5‑year life, no residual value); Trade payables \(45{,}000\); Loan \(80{,}000\); Capital \(120{,}000\); Opening retained earnings \(30{,}000\). Additional adjustments are required: (i) a doubtful‑debts write‑off of \(5{,}000\); (ii) a provision for doubtful debts equal to 2 % of credit sales (net of returns). Returns for the year amount to \(10{,}000\). No other adjustments are needed. Compute the debt‑to‑equity ratio (total liabilities ÷ total equity) at year‑end, expressed to two decimal places.