Question

Total devt 14,40,000; Capital Employed 12,00,000; Current Assets 6,00,000; Working capital 1,20,200; Calculate Proprietary ratio

Answer 1

Hey

$\mathrm{Proprietory}\mathrm{Ratio}=\frac{\mathrm{Shareholders}\text{'}\mathrm{Funds}}{\mathrm{Total}\mathrm{Assets}}$

Working Capital = Current Assets – Current Liabilities
1,20,200 = 6,00,000 – Current Liabilities
Current Liabilities = 6,00,000 – 1,20,200 = Rs 4,79,800

Total Debt = Long-term Debt + Current Liabilities
14,40,000 = Long-term Debt + 4,79,800
Long-term Debt = 14,40,000 – 4,79,800 = Rs 9,60,200

Shareholders' Funds = Capital Employed – Long-term Debt
Shareholders' Funds = 12,00,000 – 9,60,200 = Rs 2,39,800

Total Assets = Capital Employed + Current Liabilities
Total Assets = 12,00,000 + 4,79,800 = Rs 16,79,800

$\mathrm{Proprietory}\mathrm{Ratio}=\frac{2,39,800}{16,79,800}=0.14:1$