Question

From the following information of Zee Ltd., compute the ‘Proprietary Ratio’:

Particulars	₹
Long-term Borrowings	2,00,000
Long-term Provisions	1,00,000
Current Liabilities	50,000
Non-current Assets	3,60,000
Current Assets	90,000

Options

• 18%

• 24%

• 0.28 : 1

• 0.22 or 22%.

Answer 1

0.22 or 22%.

Explanation:

1. Calculation of Total Assets:

\[\text{Total Assets} = \text{Non-current Assets} + \text{Current Assets}\]

$$\text{Total Assets} = ₹ 3,60,000 + ₹ 90,000$$

$${\text{Total Assets} = ₹ 4,50,000}$$

2. Calculation of Shareholders’ Funds:

Using the liabilities side equation:

$$\text{Total Liabilities \& Equity} = \text{Total Assets} = ₹ 4,50,000$$

$$\text{Shareholders' Funds} = \text{Total Assets} - (\text{Long-term Borrowings} + \text{Long-term Provisions} + \text{Current Liabilities})$$

$$\text{Shareholders' Funds} = 4,50,000 - (2,00,000 + 1,00,000 + 50,000)$$

$$\text{Shareholders' Funds} = 4,50,000 - 3,50,000$$

$${\text{Shareholders' Funds} = ₹ 1,00,000}$$

3. Calculation of Proprietary Ratio:

$$\text{Proprietary Ratio} = \frac{\text{Shareholders' Funds}}{\text{Total Assets}}$$

$$\text{Proprietary Ratio} = \frac{1,00,000}{4,50,000} = \frac{2}{9} \approx 0.2222$$

In percentage form:
$$0.2222 \times 100 = 22.22\% \approx 22\%$$

Proprietary Ratio = 0.22 or 22%