Accounting Ratios · Class 12 · CBSE · Commerce Accountancy
Which of the following is NOT considered while calculating Proprietary Ratio?
Practice question from Accounting Ratios (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
easy · MCQ · Q-0922B5
Which of the following is NOT considered while calculating Proprietary Ratio?
- A.Equity Share Capital
- B.Long-term BorrowingsCorrect answer
- C.Reserves and Surplus
- D.Preference Share Capital
Solution
Proprietary Ratio is calculated by dividing Proprietors' Funds (Shareholders' Funds) by Total Assets. Long-term borrowings are part of non-current liabilities (debt), not shareholders' funds, and are therefore excluded from the numerator of the proprietary ratio.
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