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Accounting Ratios Chapter 4
Accounting Ratio: It is an arithmetical relationship between two accounting variables.
Ratio Analysis: It is a technique of analysis of financial statements to conduct a quantitative analysis of information in a company’s financial statements.
“Ratio analysis is a study of the relationship among various financial factors in a business.”
- Current Assets = Current Investments (also known as Market table Securities or S.T. Investment)
- Inventories (except Loose Tools & Stores and Spares)
- Trade Receivables (Debtors and B.R.) Net after provision for bdd.
- Cash and Cash Equivalents (Cash and Bank Balances)
- Short-Term Loans and Advances
- Other Current Assets (Prepaid Expenses, Accrued Income & Advance Tax)
- Current Liabilities = Short-Term Borrowings (Bank Overdraft and Cash Credit)
- Trade Payables (Creditors and B.P.)
- OtherCurrent Liabilities (O/s Expenses, Income Received in Advance, Unpaid or Ui claimed
Dividend) - Short-Term Provisions (Provision for Tax, Proposed Dividend)
- Liquid Assets = Current Assets
- Inventory (closing)
- Other Current assets (Prepaid Expenses, Accrued Income & Advance Tax)
- Working Capital = Current Assets – Current Liabilities
- Total Assets = Non-Current Assets + Current Assets
- Total Liabilities = Non-Current Liabilities + Current Liabilities
- Non-Current Assets = Fixed Assets (tangible and intangible)
- Non-Current Investments
- Long Term Loans & Advances (Capital Advances, Security Deposits)
- Non-Current Liabilities = Long Term Loans( Debentures, Bank Loans,Bonds)
- Long Term Provisions (Provision for employee benefit & Warranties)
- Capital Employed = Shareholders Fund
- Borrowed Fund (Non-Current Liabilities)
- Capital Employed = Total Assets – Current Liabilities = Non-Current Assets + Working Capital
- Shareholders Fund = Share Capital
- Reserves and Surplus Non-Current Non-Trade Investments
- Shareholders Fund = Total Assets – Non-Current Liabilities – Current/liabilities
Author | – |
Language | English |
No. of Pages | 17 |
PDF Size | 3.5 MB |
Category | Education |
Source/Credits | aspirationsinstitute.com |
Accounting Ratios Class 12 All Formulas Book PDF Free Download