Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What will be the proprietary ratio if the following information of the company is available?

PARTICULARS AMOUNT (₹)
Equity share capital 1500000
General reserve 1000000
Profit and loss balance ( negative) 100000
Debentures 1000000
Loan from bank 700000
Current liabilities 400000
Goodwill 500000
Other non-current assets 2200000
Current assets 1800000
Options:

53.33%

43.33%

63.33%

73.33%

Correct Answer:

53.33%

Explanation:

Proprietary Ratio = Shareholders’, Funds/Capital employed (or net assets)
                         
    = 2400000/ 4500000
                             = 53.33%

* Total assets = Goodwill + other non current assets + current assets
                  = 500000 + 2200000 + 1800000
                  = ₹4500000

*Shareholder's funds = Equity share capital +  general reserve - profit and loss balance(negative balance)
             = 1500000 +1000000 - 100000   
             = ₹2400000