Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What does the proprietary ratio indicate?

Options:

Current assets financed by debentures.

Total assets financed by shareholder's funds

Total assets financed by Reserves

Current assets financed by shareholder's funds

Correct Answer:

Total assets financed by shareholder's funds

Explanation:

The proprietary ratio expresses relationship of proprietor’s (shareholders) funds to net assets and is calculated as follows :
Proprietary Ratio = Shareholders’, Funds/Capital employed (or net assets)