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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Calculate the Proprietary Ratio, if the Total Assets to Debt Ratio is 2:1. Debt is ₹5,00,000. Equity Share Capital is 0.5 times of Debt. Preference Share Capital is 25% of Equity Share Capital. Net Profit before Tax is ₹10,00,000, and the rate of tax is 40%.
(CBSE Sample Paper 2020)
Total Assets = Debt × 2 = 5,00,000 × 2 = ₹10,00,000
Equity Share Capital = 0.5 × Debt = 0.5 × 5,00,000 = ₹2,50,000
Preference Share Capital = 25% of Equity Share Capital = 0.25 × 2,50,000 = ₹62,500
Total Share Capital = 2,50,000 + 62,500 = ₹3,12,500
Tax = 40% of 10,00,000 = ₹4,00,000
Net Profit after Tax (Surplus) = 10,00,000 − 4,00,000 = ₹6,00,000
Shareholders’ Funds = Total Share Capital + Surplus = 3,12,500 + 6,00,000 = ₹9,12,500
Proprietary Ratio = Shareholders’ Funds ÷ Total Assets = 9,12,500 ÷ 10,00,000 = 0.9125:1, or 91.25%
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.62 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
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