Determine the proprietary ratio and equity ratio, Managerial Accounting

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Proprietary ratio/ equity ratio

Meaning: the ratio measures a relationship among proprietor's funds and the total assets.

Objective: the objective of computing this ratio is to find out how the proprietors have financed the assets.

Computation: this ratio is computed by dividing the proprietor's funds by total assets. The ratio can be calculated.

This ratio can also be shown in percentage which indicates the percentage of owner's capital to total capital of the firm.

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