Accounting · Ratio Analysis
If a company's Proprietary Ratio is 0.75, what does this indicate about the long-term solvency and the composition of its total assets?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 175 percent of the total assets are financed by creditors and external lenders.
- 2The company has a very low level of equity and is highly dependent on short-term bank borrowings.
- 375 percent of the total assets are funded by the shareholders' own funds.✓
- 4The company's fixed assets are 75 percent of its current assets.
Correct answer
75 percent of the total assets are funded by the shareholders' own funds.
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