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Asked by Pradeep Last Modified
Answer 
To answer this question, we need to take a step back and just classify the elements of "Debt Equity Ratio" & "Current Ratio".
"Debt-Equity ratio" is relationship between Debts & Own capital (does not include any current liabilities) on the other side the current ratio is showing relationship between Current Assets vis-a-vis Current Liabilities.
Every transaction that we record in books of accounts impact two accounts and if transactions impact the accounts lying in above categories it will certainly impact the ratio as well.
Let’s see,
Settlement of Long Term Liabilities from issue of Share Capital decreases the Debt Equity ratio being debt reduced & Capital increased however the amount came in bank via issue of capital got paid to long term liabilities so no impact on current ratio.
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