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Director's loans

This topic has 3 replies, 2 voices, and was last updated 6 years ago by MikeLittle.

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February 10, 2016 at 9:37 pm #299976
abdulbasit16
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Sir I came a question where they have included director’s loan as part of equity in calculating ROE. So why are loans from directors part of equity although shown as non-current liability?
February 11, 2016 at 7:16 am #300009
MikeLittle
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I would suggest that the treatment depends whether the load is in the nature of long term capital employed or whether it is a short term affair to get the company through a temporary financial crisis

The scenario you quote suggests that the loan is in nature a part of capital employed, long term financing

Ok?
February 11, 2016 at 8:16 am #300011
abdulbasit16
- Topics: 165
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Right. Thank you.
February 11, 2016 at 9:30 am #300023
MikeLittle
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You’re welcome
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