62 :- Calculate Proprietary Ratio, if Total Assets to Debt Ratio is 2:1. Debt is Rs 5,00,000. Equity Shares Capital is 0.5 times of debt. Preference Shares Capital is 25% of equity share capital. Net profit before tax is Rs 10,00,000 and rate of Tax is 40%.
Solution :-
Total Assets to Debt ratio = Total Assets/Debt
2 = Total Assets/5,00,000
Total Assets = Rs 10,00,000
Equity Share Capital = 0.5 x 5,00,000
= Rs 2,50,000
Preference Share Capital = 25% of Equity Share Capital
= 25% x 2,50,000
= Rs 62,500
Net Profit before Tax = Rs 10,00,000
Tax Rate = 40%
Profit after Tax = 10,00,000 – [40% x 10,00,000]
= 10,00,000 – 4,00,000
= Rs 6,00,000
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + Surplus
= 2,50,000 + 62,500 + 6,00,000
= Rs 9,12,500
Proprietary Ratio = Shareholder’s Funds/Total Assets
= 9,12,500/10,00,000
= 0.9125 : 1 or 91.25 %