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Question
On the basis of following information received from a firm, its Proprietary Ratio will be:
Non-Current Assets ₹ 3,30,000; Current Assets ₹ 1,90,000; Preliminary Expenses ₹ 30,000; Equity Share Capital ₹ 2,44,000; Preference Share Capital ₹ 1,70,000; Reserve Fund ₹ 58,000.
Options
70%
80%
85%
90%
MCQ
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Solution
85%
Explanation:
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + Reserve Fund − Preliminary Expenses
= 2,44,000 + 1,70,000 + 58,000 − 30,000
= ₹ 4,42,000
Total Assets = Non-Current Assets + Current Assets
= 3,30,000 + 1,90,000
= ₹ 5,20,000
Proprietary Ratio = `"Shareholder’s Funds"/"Total Assets"`
= `(4,42,000)/(5,20,000)`
= 0.85
To express this as a percentage, multiply by 100:
0.85 × 100
= 85%
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