Practice - Proprietary Ratio
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Practice Questions
Test your understanding with targeted questions
What is the formula for the Proprietary Ratio?
💡 Hint: Think about what the ratio is measuring.
How does a higher Proprietary Ratio affect financial risk?
💡 Hint: Consider what higher equity funding implies.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does a higher Proprietary Ratio indicate?
💡 Hint: Think about the implications of financing through shareholders' equity.
True or False: A Proprietary Ratio of 1 means all assets are financed by equity.
💡 Hint: Consider the meaning of a total reliance on equity financing.
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Challenge Problems
Push your limits with advanced challenges
You have two companies: Company A with Shareholders' Funds of ₹4,00,000 and Total Assets of ₹10,00,000, and Company B with Shareholders' Funds of ₹8,00,000 and Total Assets of ₹9,00,000. Compare their Proprietary Ratios and assess which company might have lower financial risk.
💡 Hint: Compare the ratios directly.
A startup reports Shareholders' Funds of ₹1,00,000 and Total Assets of ₹2,50,000. What is the Proprietary Ratio, and what does this suggest about the startup's reliance on debt?
💡 Hint: Analyze the result in the context of startup financing.
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Reference links
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