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Question
On the basis of following data, the proprietary ratio of a Company will be:
Equity Share Capital ₹ 6,00,000; Debentures ₹ 2,40,000; Statement of Profit & Loss Debit Balance ₹ 40,000.
Options
74%
65%
82%
70%
MCQ
Fill in the Blanks
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Solution
70%
Explanation:
Proprietary Ratio = `"Shareholder’s Funds"/"Total Assets"`
Shareholder’s Funds = Equity Share Capital − Profit & Loss Debit Balance
= 6,00,000 − 40,000
= ₹ 5,60,000
Total Assets = Shareholder’s Funds + Debentures
= 5,60,000 + 2,40,000
= ₹ 8,00,000
Proprietary Ratio = `(5,60,000)/(8,00,000)`
= .70
To express this as a percentage, multiply by 100:
0.70 × 100
= 70%
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