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Thursday, April 7, 2011

Proprietary Ratio Formula & Example

Definition: Proprietary Ratio (also known as Equity Ratio or the Net Worth to Total Assets Ratio) is the proportion of shareholders' funds to total assets. A high ratio will indicate that the firm has sufficient amount of equity to support the functions of the business.

Formula:
Proprietary Ratio = Shareholders funds / Total Assets
Or,
Proprietary Ratio = Shareholders' equity / Total tangible

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