# Accounting Ratios Class 12 All Formulas PDF

### 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.”

1. 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)
• Other Current Assets (Prepaid Expenses, Accrued Income & Advance Tax)
1. 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)
1. Liquid Assets = Current Assets
• Inventory (closing)
• Other Current assets (Prepaid Expenses, Accrued Income & Advance Tax)
1. Working Capital = Current Assets – Current Liabilities
2. Total Assets = Non-Current Assets + Current Assets
3. Total Liabilities = Non-Current Liabilities + Current Liabilities
1. Non-Current Assets = Fixed Assets (tangible and intangible)
• Non-Current Investments
1. Non-Current Liabilities = Long Term Loans( Debentures, Bank Loans,Bonds)
• Long Term Provisions (Provision for employee benefit & Warranties)
1. Capital Employed = Shareholders Fund
• Borrowed Fund (Non-Current Liabilities)
1. Capital Employed = Total Assets – Current Liabilities = Non-Current Assets + Working Capital
2. Shareholders Fund = Share Capital
• Reserves and Surplus Non-Current Non-Trade Investments
• Shareholders Fund = Total Assets – Non-Current Liabilities – Current/liabilities