Question :
On the basis of following information received from a firm, its proprietary ratio will be -
Particulars
Amount
Fixed assets
330000
Current assets
190000
Preliminary Exp.
30000
Equity share capital
244000
Prefrence share capital
170000
Reserve Fund
58000
Option 1: 80%
Option 2: 85%
Option 3: 70%
Option 4: 90%
Correct Answer: 85%
Solution : The shareholder's equity is divided by the total assets of the company to arrive at the proprietary ratio, which is expressed as a percentage.
Hence the ratio is -
= (Equity share capital + Preference share capital + Reserve Fund - Preliminary Exp.)/(Fixed assets + Current assets)
= Rs.(244000 + 170000 + 58000 - 30000)/Rs.(330000+190000)
= Rs.442000/Rs.520000
= 85%
Hence the correct answer is option 2.
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