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Question
Non-Current Assets ₹ 5,00,000; Current Assets ₹ 3,00,000; Equity Share Capital ₹ 4,00,000; Reserve ₹ 2,00,000; Long-term Debts ₹ 40,000. Proprietary Ratio will be ______.
Options
75%
80%
125%
133%
MCQ
Fill in the Blanks
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Solution
Non-Current Assets ₹ 5,00,000; Current Assets ₹ 3,00,000; Equity Share Capital ₹ 4,00,000; Reserve ₹ 2,00,000; Long-term Debts ₹ 40,000. Proprietary Ratio will be 75%.
Explanation:
Proprietary Ratio = `"Shareholder’s Funds"/"Total Assets"`
Shareholder’s Funds = Equity Share Capital + Reserve
= 4,00,000 + 2,00,000
= ₹ 6,00,000
Total Assets = Non-Current Assets + Current Assets
= 5,00,000 + 3,00,000
= ₹ 8,00,000
Proprietary Ratio = `(6,00,000)/(8,00,000)`
= 0.75
To express the ratio as a percentage, multiply the result by 100.
0.75 × 100 = 75%
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