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_____________ establishes relationship between the shareholders' funds and the total tangible assets

  • A.Debt-Equity ratio
  • B.Capital Gearing ratio
  • C.Proprietary ratio
  • D.Return on total resources

Answer: C

The proprietary ratio establishes the relationship between shareholders' funds and total tangible assets. It is the shareholders' funds divided by the total tangible assets, and a high value means that a larger part of the assets is financed by the owners. The debt-equity ratio compares outside funds with owners' funds, the capital gearing ratio compares fixed-return capital with equity, and return on total resources is a profitability measure.

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