alleryStart learning →Post buy-back, debt is Rs 60 lakh and equity is Rs 20 lakh. What follows?
ARatio 3:1 is within the limit
BRatio 3:1 breaches the limit
CRatio 2:1 is within the limit
DRatio 1:3 breaches the limit
Answer & Solution
Correct answer: B. Ratio 3:1 breaches the limit
Debt of 60 against equity of 20 is 3:1, which is above the permitted 2:1 so the buy-back fails the test.
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