Fixed Assets Rs5,00,000; Current Assets Rs3,00,000; Equity Share Capital Rs4,00,000; Reserve Rs2,00,000; Long-term Debts Rs40,000. Proprietary Ratio will be :

93.75%

Shareholders funds = Equity Share Capital + Reserve
                               = 4,00,000+2,00,000
                               =6,00,000

Capital employed is equal to the long-term debt + shareholders’ funds. Alternatively, it may be taken as net assets which are equal to the total assets – current liabilities.

Total assets =Fixed Assets + Current Assets
                    = 5,00,000 + 3,00,000
                    = ₹800000
Current Liabilities = Total Assets - (Equity Share Capital + Reserve + Long-term Debts)
                            = 800000 - (400000 + 200000 + 40000)
                           = 800000 - (640000)
                           = ₹160000

Capital employed(Net assets) = Total assets – current liabilities
                                                = 800000 - 160000
                                                = 640000
                 or
Capital employed = Equity Share Capital + Reserve + Long-term Debts
                            = 400000 + 200000 + 40000
                            = 640000

Proprietary Ratio = Shareholders’, Funds/Capital employed
Proprietary Ratio = 600000/640000 X 100
                           = 93.75 %

** This ratio can also be computed in relation to total assets instead of net assets (capital employed).
If we use total assets then proprietary ratio will be- (Shareholders funds/ Total assets) X 100
                                                                                = (600000/800000) X 100
                                                                                = 75%
As the 75% is not given in the option, then it was calculated through net assets or capital employed.