The correct answer is A. Rs. 7,20,000.
Proprietary ratio is a measure of a company’s financial leverage. It is calculated by dividing the company’s fixed assets by its proprietary funds. Proprietary funds are the funds that belong to the owners of the company, and they are made up of the company’s equity and retained earnings.
A high proprietary ratio indicates that the company has a lot of debt, while a low proprietary ratio indicates that the company has a lot of equity. A proprietary ratio of 0.75 indicates that the company has a debt-to-equity ratio of 1.33. This means that the company has $1.33 in debt for every $1 in equity.
To calculate the fixed assets, we need to know the proprietary funds and the proprietary ratio. We are given that the proprietary funds are Rs. 1,60,000 and the proprietary ratio is 0.75. Therefore, the fixed assets are:
Fixed assets = Proprietary funds * Proprietary ratio
= Rs. 1,60,000 * 0.75
= Rs. 1,20,000
We can also calculate the fixed assets by using the following formula:
Fixed assets = Current assets + Non-current assets – Current liabilities
= Rs. 4,00,000 + Rs. 1,60,000 – Rs. 1,60,000
= Rs. 7,20,000
Therefore, the fixed assets are Rs. 7,20,000.