Question : Equity share capital Rs.15,00,000.
Reserve and Surplus Rs.7,50,000.
Total Assets Rs.45,00,000.
Proprietary Ratio?
Option 1: 35%
Option 2: 50%
Option 3: 66.67%
Option 4: 75%
Correct Answer: 50%
Solution : By dividing owners' funds by total assets, the proprietary ratio is calculated. According to the balance sheet, the proprietors' funds consist of share capital, reserves, and surpluses. According to the balance sheet, total assets consist of both long-term and short-term assets, including goodwill and other items.
So the proprietary ratio is as follows :
Total Shareholder Fund = Equity Share Capital + Reserve & Surplus = Rs.15,00,000 + Rs.75,00,00 = Rs.22,50,000.
Total Assets = Rs.45,00,000.
Proprietary ratio = Shareholder Fund / Total assets
= Rs.22,50,000/Rs.45,00,000
= 50%
Hence, the Correct answer is option 2.
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