16,000 = Rs. Creditors Turnover Ratio/Trade Payable Turnover Ratio: Advance tax = Rs. 350000 (4) Reserve and Surplus: Rs. 10,000 + (Rs. svg: { etc. Topic 1: Introduction 1. CBSE Notes for Class 12 Accountancy PART I Accounting for Not-for-Profit Organisation Accounting for Partnership: Basic Concepts Reconstitution of a Partnership Firm — Admission of a Partner Reconstitution of a Partnership Firm — Retirement/Death of a Partner Dissolution of Partnership Firm PART II Accounting for Share Capital Issue and Redemption of Debentures Financial Statements of […] Important Points 1-b, 2-b, 3-c. = Rs. Limitations of Ratio Analysis: i. This subject records, allocates and outlines the transactions of a business. 2. Liquidity Assets = Current assets − (Inventories + Prepaid expenses + Advance tax) This ratio indicates whether investment in stock is within proper limit or not. = Purchases + Decrease in inventory + Direct Expenses Creditors on 31.3.2015 = 1,30,000 Current Liabilities: trade payables (Bills Payable + sundry creditors) + expenses payable Credit Revenue from operations = Total revenue from operations − Cash revenue from operations 3. Cost of Revenue from = Purchases + (Opening Inventory − Closing Inventory) + operations Direct Expenses The document Chapter Notes - Accounting Ratios Commerce Notes | EduRev is a part of the Commerce Course Accountancy Class 12. Solvency Ratio : Solvency ratios convey an enterprise’s ability to meet its long term obligations as and when they becomes due. 40,000 + Rs. This Ratio indicates the margin of gross profits available on Revenue from Operations. 2. 2. The entire CBSE Class 12 Accountancy Syllabus is basically divided into three parts. 2,20,000 1,00,000 3,00,000 + Rs. of days/month in a year ÷Trade Payables Turnover Ratio. Operating Ratio = Operating Cost / Net Revenue from Operations × 100 1. This ratio is expressed in TIMES. All Profitability ratios are shown in percentage form. 90,000 = Rs. Total Assets to debt ratio = Total Assets / Long term Debts All you need of Commerce at this link: Commerce Accounting Ratios 5,000 Chapter 5 Accounting Ratios. 4. Dec 18, 2020 - Ratios (Important Questions) : Accountancy Class 12 Class 12 Notes | EduRev is made by best teachers of Class 12. Activity Ratios/Turnover Ration/Performance Ratios Operating Ratio + Operating Profit Ratio =1 4. Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. Generally higher is the ratio, the more efficient is the management of the trade receivables. (c) Proprietary Ratio: Proprietary ratio expresses relationship of proprietor’s (shareholders) funds to net assets and is calculated as follows: Proprietary Ratio = Shareholders, Funds / Capital employed (or net assets), Significance: Higher proportion of shareholders’ funds in financing the assets is a positive feature as it provides security to creditors. 80,000 Hi friends, On this page, I am sharing the class 12th notes and eBook on the topic - Accounting Ratios of the subject - Accounts subject. Receivable are taken before deducting any Provision for Doubtful Debts. Question 1. 1. Accounting Ratios 203 the financial statements, it is termed as accounting ratio. = Rs. Bills Payables on 1.4.2014 = 1,00,000 Ratio analysis is based on the historical accounting information which sometimes makes it difficult to predict the future condition of the business or consider the changes in the price level. The NCERT Solutions to the questions after every unit of NCERT textbooks aimed at helping students solving difficult questions.. For a better understanding of this … Financial Statements are used for analysis, comparison and interpretation purpose. 4. Answer. (a) Inventory Turnover Ratio: It determines the number of times inventory is converted into revenue from operations during the accounting period under consideration. OR Financial Statement of a Company 10. 90,000 Average Trade Payables = Creditors in the beginning + Bills payables in the beginning + Creditors at the end + Bills payables at the end / 2 1. Download Revision Notes for CBSE Class 12 Accountancy.Short notes, brief explanation, chapter summary, quick revision notes, mind maps and formulas made for all important topics in Accountancy in Class 12 available for free download in pdf, click on the below links to access topic wise chapter notes based on 2021 syllabus and guidelines issued for Grade 12. Current assets include current investments, inventories, trade receivables (debtors and bills receivables), cash and cash equivalents, short-term loans and advances and other current assets such as prepaid expenses, advance tax and accrued income, etc. These ratios measure the efficiency of asset management and measure the effectiveness with which an enterprise uses resources at its disposal. 2. Calculate Gross profit ratio and Operating ratio. Average Inventory = Inventory in the beginning + Inventory at the end / 2 These ratios indicate the speed at which, activities of the business are being performed. (d) Working Capital Turnover Ratio: It reflects relationship between revenue from operations and net assets (capital employed) in the business. 1. Net Profit = Gross Profit – Operating Expenses – Non Operating Expenses + Non Operating Income This document is highly rated by Class 12 … 73,000 + Rs. PDF download free. This ratio indicates the percentage of net profits in relation to Revenue from Operations. 80,000 = Rs. (i)... 2. Debt-Equity Ratio = Long term Debts / Shareholders' Funds, Shareholders’ Funds (Equity) = Share capital + Reserves and Surplus + Money received against share warrants 3. Capital Employed = Share Capital + Reserves and Surplus – Non Trading Investments + Non Current Liabilities The important Profitability ratios are: Capital Employed = Non Current Assets + Working Capital The Basics Of Accounting Ratios And Formulas by businessnewsdaily.com. These ratios are very important as profitability is the measurement of the overall performance and efficiency of the management. Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio Analysis and Cash Flow Statements with Conclusion) A high liquidity ratio indicates that the cash position of the company is good. Parties interested in this ratio are debenture holders and lenders of long term credit. 2,00,000. Net Profit = Net Revenue from Operations – Operating Cost – Non Operating expenses + Non Operating Income NCERT Book for Class 12 Accountancy-II Chapter 5 Accounting Ratios is available for reading or download on this page. = Rs. 5,000. 1. It shows the relationship between Net profit before interest, Tax and Divided and Capital Employed of the business. 4,000 − Rs. Gross Profit Ratio : It shows the relationship between Gross Profits and Net Sales i.e., Net Revenue from Operation. Solvency Ratio Analysis – Accounting Ratios Class 12 Solvency Ratio Analysis : It measure the ability of a business to survive for a long period of time. CBSE Quick Revision Notes and Chapter Summary Class-12 Accountancy Part - B - Accounting Ratios. Cash Revenue from operations 20% of Total Revenue from operations 3. 1,30,000 + Rs. Generally a higher ratio indicates efficient use of working capital. Profitability ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business. 24,000, calculate current assets and current liabilities. 4. It expresses the relationship between the cost of revenue from operations and average inventory. This subject records, allocates and outlines the transactions of a business. 5,000) = Rs. Enable hand tool. = Rs. This ratio can also be calculated on the basis of the Cost of Revenue from Operations i.e., Cost of Goods Sold. Cost of Material Consumed = Raw Material Purchased + Changes in inventory of Raw Material The language of the session will be in Hindi and notes will be provided in English. Creditors on 1.4.2014 = 3,00,000 Profits before Tax = $\frac{\Pr%20ofits\,after\,Tax}{(100%20-%20Tax\,Rates}%20\times%20100$ Financial Statement Analysis 11. It shows the safety margin available to the lenders of the business as they can ascertain the portion of the shareholders in the business. Pin By Ncert Solutions On Ts Grewal Solutions Class 11 by pinterest.com X Ltd., has a current ratio of 3.5 : 1 and quick ratio of 2 : 1. DK Goel Solutions for Class 12 helps the students to study and comprehend the accounting fundamentals which helps them to answer the complex questions in an easy way. Accounting ratios are widely used for such comparisons. It is made with the latest syllabus in mind and contains all the tips and tricks with which you can learn Accountancy better and score well. = Rs. MCQ Questions for Class 12 Accountancy with Answers were prepared based on the latest exam pattern. Even the teachers refer to textbooks while preparing the final question paper of Class 12 Accountancy. Accounting Ratios: L-5 | Activity or Turnover Ratios | Class 12 Accounts PDF Notes | V Commerce. This Ratio indicates the percentage of Net profits before interest, tax and dividend in relation to Capital Employed of the business. Account. 3,40,000 − Rs. 16,000 Home » Accountancy Class 12 » Accounting Ratios Class 12. After a thorough research by the experts, by researching previous papers, chapter-wise weightage has been allocated. 4. Debt Equity Ratio From the following information, calculate current ratio. This PDF file for class 12 Accounts subject's Accounting Ratios topic contains brief and concise notes for easy understanding of topics and quick learning. = Rs. 2,40,000 (d) Interest Coverage Ratio: It is a ratio which deals with the servicing of interest on loan. = Rs. The topics included in NCERT Books for Class 12 Accountancy are Accounting for Not-for-Profit Organisation, Dissolution of Partnership Firm, Cash Flow Statement, etc. 1. NCERT Solution For Class 12 Accountancy Chapter 5 – Accounting Ratios furnishes us with an all-inclusive data to all the concepts. = Rs. 2. Ratio analysis is the more popularly and widely used technique of financial statement analysis. Gross Profit Ratio Capital Employed = Shareholders’ Funds + Non Current Liabilities Tricks on Accounting Ratios - Day 4. This PDF file for class 12 Accounts subject's Accounting Ratios topic contains brief and concise notes for … Gross Profit Ratio = Gross Profit/Net Revenue from Operations × 100 = Rs. This ratio is expressed in TIMES. Gross Profit Ratio = $\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\rm%20Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ 46,000 + Rs. Net Credit Sales = Total Sales – Sales Return i.e., Returns inwards – Cash Sales 12th Class - CBSE - Accountancy - 345 Questions - 0 Concepts. OR Current Assets = 3.5x = 3.5 × Rs. 2,50,000 The profitability or financial performance is mostly summed up in the statement of profit and loss. From the following details, calculate interest coverage ratio: Net Profit after tax Rs. CBSE Class 12 Accountancy Revision Notes Chapter 4 Accounting Ratios 1. Total Assets to Debt Ratio : It shows the relationship between Total Assets and Debts. Accounting Ratios L-4 | Solvency Ratios ( Part-2) | Class 12 Accounts PDF Notes | Vedantu. 1. OR Net Profit Ratio : It shows the relationship between Net Profits and Net Sales i.e., Net Revenue from Operations. Quick assets = 2x 1. 56,000. Long term debts = total debts (Liabilities) − Current Liabilities Generally higher ratio is considered better but very high ratio shows over trading and low ratio means stock is piled up or over investment in stock. tex: { 2. Generally a higher ratio indicates better profitability. Stock Turnover Ratio/Inventory Turnover Ratio OR Ratio It is an arithmetical expression of relationship between two related or interdependent items. All books are in clear copy here, and all files are secure so don't worry about it. Carriage inwards = 4,000, Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory 2. Shareholders’ funds Rs. = 1,00,000 + 10,000 + 30,000 + 20,000 + 40,000 = 2,00,000 receivables turnover ratio credit sales for a year divided by the average balance in accounts receivable during the same year. Read online Accounting Ratios notes for CBSE Class 12 Accountancy book pdf free download link book now. 2. Tools of Financial Statement Analysis 12. NCERT Class 12 Accountancy Chapter 9Statement Analysis Tools and Accounting Ratios Notes are one of the best pieces of study material that students can get as it will aid them to study better and reduce some stress that they might face while the hectic year ahead. Important Questions. Go to First Page Go to Last Page. Net Credit Purchases = Total Purchases – Purchases Return/Returns Outwards Cash Purchases The above mentioned is the concept, that is elucidated in detail about the Accounting Ratios, its meaning and objectives for the Class 12 Commerce students. Operating Profit Ratio : It shows the relationship between Operating Profit and Net Sales i.e., Net Revenue form Operations. Liquidity Ratios Liquidity ratios measure the firm’s ability to fulfil its short-term financial obligations. MathJax = { fontCache: 'global' Trade receivables as at 1.4.2014 40,000 Capital Employed = fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Current Assets – Current Liabilities. Interest Coverage Ratio = Net Profit before Interest and Tax / Interest on long-term debts. 3,00,000 = 4 times, From the following information, calculate –. Bills Payables on 31.3.2015 = 70,000, Trade Payables Turnover Ratio = Net Credit Purchases / Average Trade Payables This class will be helpful for the candidates appearing for Class 12. OR It is a measure of security of interest payable on long-term debts. 208k watch mins. CBSE Class 12 Commerce Accountancy Accounting Ratios : An accounting ratio compares two aspects of a financial statement, such as the relationship (or ratio) of current assets to current liabilities. Gross Profit = Revenue from Operations − Cost of Revenue from Operation Download All DK Goel Textbook solutions for class 12 Accountancy Volume 2 chapter 5 to understand all concepts in deatils. Total Assets to Debt Ratio 22,000 = Rs. From the following information, calculate inventory turnover ratio: Inventory in the beginning = 18,000 Significance: It measures the safety margin available to the providers of long term loans. Debt / Equity ratio Non-current liabilities : Shareholders equity Measures degree of financial risk of the business A lower ratio is more favourable, the business is less of a financial risk. 1,20,000 + 80,000 + 40,000 = Rs. = Rs. Net Profit Ratio = Net profit / Revenue from Operations × 100. Nov 19, 2020 • 1h . 3 Cash ... 9 Financial Statement Analysis. 2,000 + Rs. 20,000 + Rs. 2 Statement of Changes in Financial Position. 12 Accounting for Labour. Operating Cost = Cost of Revenue from Operations + Operating Expenses Ratios when calculated on the basis of accounting information are called accounting Ratios. Quick Assets = Current Assets – Inventory – Prepaid Expenses – Advance Tax – Accrued Income Classification of ratios. Save my name, email, and website in this browser for the next time I comment. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Quick Ratio : It shows the relationship of quick assets with current liabilities. Together, students will be prepared to answer every type of question like subjective and objective and aim for the best in their last year of school. Capital employed may be taken as the total of non-current assets and working capital. 60,000/ Rs. 3. Total Assets = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Current Assets Debts = Long-term borrowing + Long-term provisions 2,40,000 / Rs. Average Payment Period = No. As we are not including Non Trading Investments as part of Capital Employed therefore Income from Non Trading Investments will not be taken into account for calculation of Net Profits. 56,000 : Rs. Accounting For Share Capital - Company Accounts 8. Free classes & tests. 4,00,000 × 20 / 100 = Rs. Interest Coverage Ratio = $\frac{Net\,\Pr%20ofitbefore\,Interest\,\&%20\,Tax}{Fixed\,Interest\,Ch\arg%20es}$ This Ratio is Considered as best measurement of the overall performance of the enterprise. CBSE Class 12. Rotate Clockwise Rotate Counterclockwise. By Liability Approach: It is better indicator of liquidity as some current assets are not easily convertible into cash. This first type of accounting ratio formula is used for ascertaining the liquidity position of the company. Operating Profit = Net Revenue from Operations – Operating Cost Ohri – Statistics for Economics Solutions Class 11, TS Grewal Class 11 Solutions for Accountancy, CoolGyan – A Portal For Students’ Solutions, CBSE Class 11 Business Studies Revision Notes, CBSE Class 11 Entrepreneurship Revision Notes, CBSE Class 11 Micro Economics Revision Notes, CBSE Class 11 Political Science Revision Notes, CBSE Class 11 Statistics Economics Revision Notes, CBSE Class 12 Business Studies Revision Notes, CBSE Class 12 Entrepreneurship Revision Notes, CBSE Class 12 Geography Revision Notes – Fundamentals of Human Geography, CBSE Class 12 Geography Revision Notes – India -People And Economy, CBSE Class 12 History Revision Notes Chapterwise, CBSE Class 12 Indian Economics Development Revision Notes, CBSE Class 12 Informatics Practices Revision Notes, CBSE Class 12 Macro Economics Revision Notes, CBSE Class 12 Physical Education Revision Notes, CBSE Class 12 Political Science Revision Notes, CBSE Class 12 Political Science Revision Notes – PART-A Contemporary World Politics, CBSE Class 12 Political Science Revision Notes – PART-B Politics in India since Independence, CBSE Class 12 Revision Notes for Psychology, CBSE Class 12 Sociology Revision Notes Chapterwise, CBSE Class 6 Science Revision Notes – Free Download, CBSE Class 7 Maths Revision Notes – Free Download, CBSE Class 7 Science Revision Notes – Free Download, CBSE Class 8 Maths Revision Notes – Free Download, CBSE Class 8 Revision Notes, Short Key Notes for CBSE (NCERT) Books, CBSE Class 8 Science Revision Notes – Free Download, Chemistry Revision Notes for Class 11 – Short Key Notes for CBSE (NCERT) Books, Chemistry Revision Notes for Class 12, Short Key Notes for CBSE Books, Class 10 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Class 11 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Class 12 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Class 6 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Class 7 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Class 9 Revision Notes, Short Key Notes for CBSE (NCERT) Books, Physics Revision Notes for Class 12, Short Key Notes for CBSE (NCERT) Books, Revision Notes for CBSE Class 10 Economics, Revision Notes for CBSE Class 10 English First Flight, Revision Notes for CBSE Class 10 Geography, Revision Notes for CBSE Class 10 Political Science, Revision Notes for CBSE Class 10 Social Science, Revision Notes for CBSE Class 11 Biology, Short Key Notes for CBSE Books, Revision Notes for CBSE Class 8 English Honeydew, Revision Notes for CBSE Class 8 English It So Happened, Revision Notes for CBSE Class 8 Hindi Bharat ki Khoj, Revision Notes for CBSE Class 8 Hindi Vasant, Revision Notes for Class 8 Social Science, Revision Notes for Class 8 Social Science Chapter 9 – Women, Caste and Reform, Revision Notes for Class 8 Social Science Chapter 8 – Civilising the Native, Educating the Nation, Revision Notes for Class 8 Social Science Chapter 7 – Weavers, Iron Smelters and Factory Owners, Revision Notes for Class 8 Social Science Chapter 6 – Colonialism and the City, Revision Notes for Class 8 Social Science Chapter 5 – When People Rebel. 3. Average Trade Payable = (Opening Creditors and Bills Payable + Closing Creditors and Bills Payable)/2 18,000 + Rs. 4. Net Profit = Operating Profit – Non Operating Expenses + Non Operating Income 11. Equity/Shareholders’ Funds = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading investment) +Long Terms Loans and Advances + Current Assets – Current Liabilities – Long –term borrowings – Long – term Provision This shows how quickly cash is realized from trade receivables. 1. = Rs. Profitability ratios are determined to analyse the earning capacity of the business which is the result of utilisation of assets employed in the business. 1,50,000 Calculate the Trade receivables turnover ratio from the following information: Total Revenue from operations 4,00,000 The activity ratios express the number of times assets employed. CBSE Class 12-commerce Accountancy Revision Notes for Accounting Ratios Accountancy is a subject closely related to any trade. There is a close relationship between the profit and the efficiency with which the resources employed in the business are utilised. Liquid Assets OR Quick Assets/ Current Liabilities. Trade Payables Turnover ratio = Net Credit purchases / Average trade payable This shows how quickly cash is paid to Trade Payables. Significance: It assesses the long term soundness of financial position of a business. 1,00,000 + Rs. We have provided Accounting Ratios Class 12 Accountancy MCQs Questions with Answers to help students understand the concept very well. OR Jain and V.K. 2. Current Ratio = Current assets : Current liabilities Cash Flow Statement. Learn the concepts of Class 12 Accountancy Accounting Ratios with Videos and Stories. Trade Receivable/Debtors turnover Ratio = $\frac{Net\,Credit\,States\,/\,{\mathop{\rm%20Cos}\nolimits}%20t\,of\,{\mathop{\rm%20Re}\nolimits}%20venue\,from\,Operations}{Average\,Debtor\,/\,Average\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivables\,}$ 2. Return on Investment or Return on Capital Employed. Students can also use the sample papers that SelfStudys provides for class 12 along with the NCERT Class 12 Accountancy Chapter 9Statement Analysis Tools and Accounting Ratios Notes provided. Working capital turnover ratio = Net Revenue from Operation / Working Capital. This ratio indicated the number of times the trade receivables are turned in relation to credit sales over a year. Solved Cash Flow Statements with Balance Sheet (vertical) and Notes to Accounts - Cbse Class 12 Accountancy Project ... Accounting project - Financial Ratio Analysis Haziq1511. Accounting Ratios - Accountancy Notes, Questions and Answers, Free Study Material, Chapter wise Online Tests. Operating Profit = Net Profit + Non Operating Expenses – Non-Operating Income ... Accounting Ratios. Share Capital = Equity share capital + Preference share capital, Shareholders’ Funds (Equity) = Non-current assets + Working capital − Non-current liabilities Working Capital = Current Assets − Current Liabilities, From the following information calculate Debt equity Ratio:-, Debt to equity ratio = Debt / Equity (shareholder funds) = 1,00,000 / 1,75,000 = 0.57 : 1 This shows how quickly inventory is sold. Current assets = Rs. Tax Rate = 40% Reliability of Ratios: Since, ratios are calculated based on the financial information, if the information available is not correct ratios calculated using such information will also be incorrect. 3. Current assets = 3.5x and CBSE Class 12-commerce Accountancy Revision Notes for Accounting Ratios Accountancy is a subject closely related to any trade. 2,50,000/Rs. 80,000 Revenue from operations = 80,000 Find: Previous. It is calculated as follows: Trade Receivable Turnover ratio = Net Credit Revenue from Operations / Average Trade Receivable, Where Average Trade Receivable = (Opening Debtors and Bills Receivable + Closing Debtors and Bills Receivable)/2. Accounting Ratios. Capital Employed = Total Assets – Current Liabilities. Meaning and definition Ratio analysis is a process of determining and presenting the quantities relationship between two accounting figures to calculate the strength and weaknesses of a business. 20,000 = 3 Times. Important Turnover ratios are : OR 1. May 7, 2019 - Accounting Ratios – CBSE Notes for Class 12 Accountancy Topic 1: Introduction 1. Profit refers to the Profit before Interest and Tax (PBIT) for computation of this ratio. Ratio is an arithmetical expression of relationship between two interdependent or related items. 2. 2,000 = Rs. Debt Equity Ratio: It show relationship between Debts (Long term Liabilities or Non Current Liabilities) and Equity (Shareholders’ Funds). Chapter 4 Accounting Ratios T S Grewal Solutions For Class by topperlearning.com. Current Ratio = Current Assets / Current Liabilities = 2, 00,000 / 1, 00,000 = 2 : 1 4. 3,20,000 60,000 Quick Assets = Current Assets – Other Current Assets RBSE Class 12 Accountancy Chapter 10 Very Short Answer Questions. This ratio can also be computed in relation to total assets instead of net assets (capital employed). This ratio indicated the number of times the Trade Payables are turned over in relation to credit purchases over a year. 10,00,000 = Rs. Inventory Turnover Ratio : It is also called as Stock turnover ratio. Capital Employed = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Working Capital Operating Cost = Cost of Material Consumed +Net Purchases of Stock in Trade + Changes in Inventories of Finished Goods, Work in Progress and Stock-in-Trade + Direct Expenses = Employees Benefit Expenses + Other Expenses such as Office Administration Expenses + Selling and Distribution Expenses + Depreciation + Bad debts + Discount on Debtors + Interest on short term loans. To know more, stay tuned to BYJU’S. 4. = Rs. To assess the operating efficiency of the business. Significance: It reveals the number of times interest on long-term debts is covered by the profits available for interest. CLASS 12 ACCOUNTANCY RATIOS NOTES 2; Thumbnails Document Outline Attachments. NCERT Solutions for Class 12 Accountancy Part 1. If excess of current assets over quick assets represented by inventories is Rs. Since interest is a charge on profit, net profit taken to calculate this ratio is before interest & tax. Average Trade Receivable =$\frac{(Opening\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivable%20+%20Clo\sin%20g\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivables)}{2\,}$ Generally lower ratio indicates that more credits are available for a longer period. $\frac{Average\,Inventory}{Stock}\,%20=%20\,\frac{Opening\,Inventory%20+%20Clo\sin%20g\,Inventory}{2}$ Free PDF download of Class 12 Accountancy Chapter 13 - Accounting Ratios Quick Revision Notes & Short Key-notes prepared by our expert Accountancy teachers from … 3,20,000 / Rs. As trade payable arise on account of credit purchases, it expresses relationship between credit purchases and trade payable. 1 Ratio Analysis. 16,000 It expresses the relationship between profits available for payment of interest and the amount of interest payable. inventory turnover ratio the cost of goods sold for a year divided by the average inventory during Ideal Ratio: No ideal ratio but a high ratio indicates higher safety to lenders and low ratio represents risky position. 60,000; 15% Long-term debt 10,00,000; and Tax rate 40%. Concepts covered in Class 12 Accountancy - Analysis of Financial Statements chapter 3 Accounting Ratios are Concept of Accounting Ratios, Objectives of Ratio Analysis, Advantages of Ratio Analysis, Limitations of Ratio Analysis, Types of Ratios. (c) Operating Profit Ratio: It is calculated to reveal operating margin. Scroll down for Accounting Ratios from NCERT Book Class 12 Accountancy Book & important study material. From the following information, prepare the B/S given below: (1) Current Ratio : 2.75 (2) Acid Test ratio: 2.25 (3) Working Capital: Rs. 50000 (5) Total CA includes stock, debtors and cash in the ratio of 2:6:3 (6) Creditors and Bills Payable are in the ratio of 3:2 (7) Fixed Assets are 50% of share capital. Return on Investment (or Capital Employed) = Profit before Interest and Tax / Capital Employed × 100. Trade receivables as at 31.3.2015 1,20,000. 4. 1,40,000 The best part is that the notes for the Accountancy revision notes for class 12 CBSE board are available as a free PDF download. 1. Accounting for Not-For-Profit Organisation 7. = Rs. The main purpose of Financial Statements is to provide the accounting information to its users. This ratio indicates the percentage of Operating costs to Revenue form Operations 1,20,000 As the students would have learnt the basic fundamentals about the subject of accountancy in Class 11, this curriculum for Class 12 is a continual part of it; it explains the concepts in a great way. The earning capacity of the firm ’ s ability to meet its long term soundness of Statements... One value contains or is contained within the other 16,000 Current assets to Current liabilities or Quick assets represented Inventories! That more credits are available as a free PDF download Debt-Equity ratio: It establishes the relationship Net...: 2:1 is considered as best but It should not be more this... Different point of view have been provided with marking scheme their preparation level Expenses Rs... And loss my name, email, and as such is known as efficiency Ratios profits Net... Tax + interest = Rs ratio measures the relationship between profits available for interest turned relation! Ratios assess the profitability or earning capacity of the business between two related or interdependent.... Related or interdependent items one value contains or is contained within the other Notes - Ratios... Enterprise ’ s ability to meet its long term obligations as and when they becomes due ‘. Net Revenue from Operations − Cost of Revenue from Operations + Operating Expenses ) / Net from... By best teachers for you a ratio may be computed in relation to credit Purchases and payable. C… a high liquidity ratio ’ from the following details, calculate interest ratio! Download Accounting Ratios MCQs PDF with Answers to know more, stay tuned to BYJU ’ s activities! You by page 5 12 × 100/ ( 100 − 40 ) = Profit before interest and on! Book Class 12 Accountancy Accounting Ratios are very important for stockholders and creditors as these Ratios indicate the speed which... Understand all concepts in deatils e an important tool of financial Statements calculation is as follows: Inventory Turnover indicates. Between various items or groups of items shown in financial Statements is to the. 0 concepts Chapter you can get links to Class 12 Accountancy Syllabus is basically divided into three parts ) ratio... Trade receivable are not given then closing trade receivables are turned in to! Ratio credit Sales = total Sales – Sales Return i.e., Net Revenue from Operations i.e., Cost Material... 2,50,000 interest Coverage ratio: It expresses the relationship of Quick assets represented by Inventories is.! Chapter Summary Class-12 Accountancy Part - b - Accounting Ratios ; Chapter 6: cash Flow statement ; Class. And short-term provisions accounting ratios class 12 notes financial Statements is to provide the Accounting information to its users safety to lenders low. The lenders of the ‘ Revenue from Operations / Average Inventory = Opening trade receivables ratio! Firm is to provide the Accounting information are called Accounting Ratios with Videos and.! For reference evaluate the financial position of a business Summary Class-12 Accountancy Part - b Accounting. Type of Accounting ratio can be used to compare the Current assets to liabilities... A residual of Operating costs to Revenue from Operations ’ are Rs ; ;... 10 ; Grade 11 ; Grade 12 www.learnxtra.co.za Brought to you by page 5 12 of these textbooks be. Ratio It is better for lenders as It indicates higher safety to lenders and ratio. The Notes for Class 12 Accountancy Chapter 13 – free PDF download total assets financed the... Or financial performance is mostly summed up in the business Ratios L-4 | Solvency Ratios Solvency Ratios ( )... Resources employed in the business are utilised | Solvency Ratios judge the long-term financial position of company!