What is the capital preservation ratio and what is the calculation formula for the capital preservation ratio
Capital preservation ratio is an indicator in the operation of enterprises, which can reflect the operation and safety of enterprise capital. What is the capital preservation ratio and what is the calculation formula for capital preservation ratio? It can be calculated based on the end of period owner's equity and the beginning of period owner's equity. Of course, there are other methods. If you want to know, please refer to the following article.

What is the capital preservation ratio and what is the formula for calculating the capital preservation ratio (Figure 1)

rate of capital accumulation 
It is one of the indicators for evaluating the economic benefits of enterprises, which can reflect the operation and safety of enterprise capital, mainly including paid in capital, capital reserves, surplus reserves, etc.

The calculation formula for capital preservation ratio
Capital preservation and appreciation rate=ending owner's equity/beginning owner's equity * 100%;

Capital preservation and appreciation rate=End of period owner's equity/Beginning of period owner's equity after deducting objective factors * 100%;

Capital preservation and appreciation rate=(beginning owner's equity current profit/beginning owner's equity * 100%)

If the profitability of a company improves and profits increase, it will inevitably result in the end of period owner's equity being greater than the beginning of period owner's equity. Therefore, this indicator is also an important indicator for measuring the profitability of a company. Of course, the level of this indicator is not only influenced by the company's operating results, but also by the company's profit distribution policies and investor investment capital.

The capital preservation and appreciation rate refers to the proportion of the owner's equity of a company at the beginning of the same year after deducting objective factors of increase or decrease. This indicator indicates that, with the efforts of the enterprise itself, the actual increase or decrease of enterprise capital is an auxiliary indicator for evaluating the financial benefits of the enterprise. This reflects the preservation and growth of investor investment in corporate capital. The higher the indicator, the better the capital preservation of the enterprise, the faster the growth of owner's equity, the safer the creditor's debt, and the stronger the development momentum of the enterprise.

case analysis

Last year, Company A had a net profit of 50 million yuan, cash dividends of 3 million yuan, and debt dividends of 7 million yuan. At the beginning of last year, the total amount of shareholder equity was 12000 yuan. Last year, there were no new shares or stock repurchases. What was the capital preservation and appreciation rate last year?

A: 132%

B: 132.5%

C: 133.33%

D: 130%

Analysis:

1. This project mainly examines the knowledge points of capital preservation and appreciation rate

2. Capital preservation and appreciation rate=ending owner's equity/beginning owner's equity * 100%

3. Capital preservation and appreciation rate=[12000 (5000-300-700)]/12000 * 100%=133.33%

After reading this article, we know that the capital preservation rate indicates the actual increase or decrease of capital under the efforts of the enterprise itself, and is also an auxiliary indicator of the financial efficiency of the enterprise. If the indicator is high, it indicates better capital preservation and also demonstrates the potential of the enterprise.