Proprietor’s fund is used while calculating proprietary ratio which helps the creditors of the company in seeing that the money in the form of loans given by the creditors to the firm are safe or not (higher the ratio better it is for the creditors as it implies that their money is relatively safe). Before calculating proprietor ratio one should know how to calculate the proprietors fund, well given below is the formula or method of calculating it –
Proprietors funds = Equity + Preference share capital + Reserves and Surplus