Ratio Analysis

Questions Bank

  • Ratio Analysis is the technique which involve analysing the financial statement by calculated various ratios. It is most powerful tool for measuring performance of enterprise.
    2018-02-12 16:00:22
  • Objectives of Ratio Analysis are (i) Estimating of business earning, (ii) Judging Managerial Efficiency, (iii) Solvency Determination, (iv) Making Comparison, (v) Formulation of Policies.
    2018-02-12 16:00:08
  • Types of Ratio are (a) Liquidity Ratio; (b) Activity Ratio;  (c) Solvency Ratio; (d) Profitability Ratio
    2018-02-12 15:59:41
  • Expression of Accounting Ratio are (i) Pure or Simple, (ii) Percentage, (iii) Times, rates, (iv) Fraction.
    2018-02-12 15:59:09
  • Ratio is calculated on the basis of accounting information, then these are called accounting ratio.
    2018-02-12 15:58:46
  • Ratio is an arithmetical expression of relationship between two related or interdependence items.
    2018-02-12 15:58:21
  • Advantages of Ratio Analysis are (i) Analysis of financial statement, (ii) Simplifying Accounting Figures, (iii) Judging the operating efficiency of business, (iv) Inter-Firm and Intra-Firm Comparison.
    2018-02-12 15:58:06
  • Limitations of Ratio Anaysis are (i) False Result, (ii) Non-Monetary Factors are ignored, (iii) Lack of Standard Ratio, (iv) Variation in Accounting Practices, (v) Effect of Price Level Change, (vi) Personal Bias.
    2018-02-12 15:57:39

  • 2018-02-12 15:57:05

Questions Bank -

Ans. Accounting ratio is the numerical relationship between two figures or two groups of figures contained in Statement of Profit and Loss and the Balance Sheet.

Ans. The two types of ratio are
(i) Liquidity ratios
(ii) Profitability ratios.

Ans. Liquidity ratio is the ratios which is calculated to assess company's ability to repay the short-term loans.

Ans. The two important liquidity ratio are 
(i)  Current Ratio
(ii) Quick Ratio.

Ans. The payment of dividend will decline as current asset will decrease without any change in current liability.

Ans. Bill receivable is dishonoured, the current ratio will have no change as it does not change either current assets or current liabilities.

Ans. The payment to the trade payable will increase because both current assets and current liabilities.

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