Read the following information and answer the following question.

Calculate Proprietary ratio.

0.6 :1

The correct answer is option 3- 0.6 :1

Proprietary ratio = Shareholders funds/Capital employed 
                          = 24,00,000/ 40,00,000
                          = 0.6 :1

Note: Proprietary Ratio can be calculated by using 2 formulas as per NCERT.

a. Proprietary ratio = Shareholders funds/Capital employed or Net Assets

Net Assets  = Total Assets−Current Liabilities = Capital Employed

Thus Net Assets = Capital Employed

b. The NCERT , however, in some practical question have used the following formula to calculate the Proprietary ratio

Proprietary ratio = Shareholders funds/Total Assets. 

$\text{Total Assets}=\text{Capital Employed}+\text{Current Liabilities }$=40,00,000+4,80,000=44,80,000

Proprietary ratio = 24,00,000/ 44,80,000 ≈0.54:1

Thus, as per NCERT, both methods of calculation are acceptable. However, since this question provides Capital Employed and the only matching option is 0.6 : 1, Option (3) is the correct answer.