The ratio illustrates the relationship in between the owners’ contribution and the total volume of assets. In simple words, how much funds are contributed by the owners in financing the assets of the firm. Greater the ratio means that greater contribution made by the owners’ in financing the assets.
Proprietary Ratio= (Owners' Funds or Equity or Shareholders' funds / Total assets)
Standard Norm of the ratio
Higher ratio is better position for the firm as well as safety to the creditors.
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