3,40,000 × 100 = 64.71% Liquidity Ratios Liquidity ratios measure the firm’s ability to fulfil its short-term financial obligations. Creditors Turnover Ratio/Trade Payable Turnover Ratio: 16,000 = Rs. 1. Useful tool for analysis of financial statements. 1. OR 40,000 + Rs.  Revenue from operations = 80,000 Total Assets to Debt Ratio Retrun on Investment (ROI) = $\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ Inventory Turnover Ratio : It is also called as Stock turnover ratio. This ratio is expressed in TIMES. Nov 19, 2020 • 1h . Net Working Capital and Revenue from Operations i.e., Net Sales. CBSE Quick Revision Notes and Chapter Summary Class-12 Accountancy Part - B - Accounting Ratios. Significance: It measures the proportion of total assets financed by the Proprietors of the business. Shareholders’ funds Rs. It expresses the relationship between the cost of revenue from operations and average inventory. Cbse Class 12 Accountancy Revision Notes For Accounting by coolgyan.org. 20,000 = 3 Times. Enable hand tool. OR 1,00,000, it can be said that the gross profit is 10% × 10,000 100 1,00,000 of the ‘Revenue from Operations’ . Download All DK Goel Textbook solutions for class 12 Accountancy Volume 2 chapter 5 to understand all concepts in deatils. 16,000 2. Ratio is an arithmetical expression of relationship between two interdependent or related items. From the following information, calculate inventory turnover ratio: Inventory in the beginning = 18,000 Accounting ratio can be classified from different point of view. Meaning: The quantitative relation between two amounts showing the number of times one value contains or is contained within the other. Debt-Equity Ratio = Long term Debts / Shareholders' Funds, Shareholders’ Funds (Equity) = Share capital + Reserves and Surplus + Money received against share warrants Credit Revenue from operations = Total revenue from operations − Cash revenue from operations The language of the session will be in Hindi and notes will be provided in English. 3,40,000 − Rs. Generally a higher ratio indicates better profitability. Accounting Ratios - CBSE Notes for Class-12 Accountancy. This ratio is a relationship between the Cost of goods sold i.e, Cost of Revenue form Operations during a particular period of time and the Cost of average inventory during a particular period. This ratio indicates whether investment in stock is within proper limit or not. Accounting Ratios It is a mathematical expression that shows the relationship between various items or groups of items shown in financial statements. 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. 1,50,000 = Rs. 1,00,000 + Rs. Gross Profit Ratio 1. Ratio analysis is the more popularly and widely used technique of financial statement analysis. Working Capital Turnover Ratio 4.Interest Coverage Ratio : This ratio establishes relationship between the Net Profit before Interest & Tax and interest payable on long term debts (Fixed Interest Charges) 3,20,000 / Rs. 80,000 (d) Net Profit Ratio: It relates revenue from operations to net profit after operational as well as non-operational expenses and incomes. 80,000 Generally a higher ratio indicates efficient use of working capital. Equity/Shareholders’ Funds = Share Capital + Reserves and Surplus – Non – Trading Investments = Net Credit Revenue Form Operations / Average Inventory 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. Gross Profit Ratio : It shows the relationship between Gross Profits and Net Sales i.e., Net Revenue from Operation. It is computed as follows: Gross Profit Ratio = Gross Profit / Net Revenue of Operations × 100. Accounting Ratios. CBSE Class 12 Accountancy Chapter 13 Important Questions – Free PDF Download. 3. 3,20,000 2. 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. 2. The entire NCERT textbook questions have been solved by best teachers for you. 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. Highlight all Match case. Trade Payables Turnover ratio = Net Credit purchases / Average trade payable  Bills Payables on 31.3.2015 = 70,000, Trade Payables Turnover Ratio = Net Credit Purchases / Average Trade Payables = Rs. = 1.67 times. = Rs. This ratio indicates the percentage of net profits in relation to Revenue from Operations. Read online Accounting Ratios notes for CBSE Class 12 Accountancy book pdf free download link book now. High Ratio is better for lenders as it indicates higher safety margin. 18,000 + Rs. Net Profit after Tax = Rs. Answer. Accounting Ratios – CBSE Notes for Class 12 Accountancy 1. Your email address will not be published. Important Points = Rs. As trade payable arise on account of credit purchases, it expresses relationship between credit purchases and trade payable. OR A high liquidity ratio indicates that the cash position of the company is good. Accounting Ratios It is a mathematical expression that shows the relationship between various items or groups of items shown in financial statements. Revision Notes for CBSE Class 12 Accountancy Chapter 13 – Free PDF Download. Operating Profit = Net Revenue from Operations – Operating Cost Calculate the Trade payables turnover ratio from the following figures: Credit purchases during 2014-15 = 12,00,000 73,000 + Rs. 2,20,000 / Rs. 10,000 + (Rs. 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 […] From the following details, calculate interest coverage ratio: Net Profit after tax Rs. = Rs. 3. 5,000 (a) Inventory Turnover Ratio: It determines the number of times inventory is converted into revenue from operations during the accounting period under consideration. Explain the meaning of financial statement. NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. CBSE Class 12-commerce Accountancy Revision Notes for Accounting Ratios Accountancy is a subject closely related to any trade. Net Profit before tax = Net profit after tax × 100/ (100 − Tax rate) Quick Assets = Current Assets – Inventory – Prepaid Expenses – Advance Tax – Accrued Income Interest Coverage Ratio = Net Profit before Interest and Tax / Interest on long-term debts. These show rotation of concerned item within an accounting period. Accounting Ratios – CBSE Notes for Class 12 Accountancy. 5. 60,000 Current Liabilities: trade payables (Bills Payable + sundry creditors) + expenses payable Objective & Significance-Objective is to ascertain the amount of profit available to cover the interest charge. (d). Profitability Ratio: 4,00,000 } Net profit before interest and tax = Net profit before tax + Interest For evaluating the progress and future prospects of an organization, both quantitative and qualitative aspects are to … To assess the operating efficiency of the business. All Profitability ratios are shown in percentage form. Quick Ratio = Quick assets : Current liabilities Generally a higher ratio indicates better profitability. Chapter 4 Accounting Ratios T S Grewal Solutions For Class by topperlearning.com. May 7, 2019 - Accounting Ratios – CBSE Notes for Class 12 Accountancy Topic 1: Introduction 1. Changes in inventory = Opening Inventory – Closing Inventory For example, if the gross profit of the business is Rs. Students should solve the CBSE issued sample papers to understand the pattern of the question paper which will come in class 12 board exams this year. Current Ratio = 3.5 : 1  Quick Ratio = 2 : 1 Accounting Ratios - Accountancy Notes, Questions and Answers, Free Study Material, Chapter wise Online Tests. Ratios when calculated on the basis of accounting information are called accounting Ratios. average collection period 360 or 365 days divided by the receivables turnover ratio. 1. 16,000 = 2 : 1. Profitability ratios are determined to analyse the earning capacity of the business which is the result of utilisation of assets employed in the business. The document Chapter Notes - Accounting Ratios Commerce Notes | EduRev is a part of the Commerce Course Accountancy Class 12. Current Ratio = Current Assets / Current Liabilities = 2, 00,000 / 1, 00,000 = 2 : 1 = Rs. NOTES. This ratio indicates whether the c… Accounting Ratios Class 12. 12,00,000 / Rs. = Rs. Account. This ratio can also be calculated on the basis of the Cost of Revenue from Operations i.e., Cost of Goods Sold. 20,000 Capital Employed = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Working Capital of days/month in a year ÷Trade Payables Turnover Ratio. quick ratio same as acid-test ratio. Question 1. Trade Receivable/Debtors turnover Ratio = $\frac{Net\,Credit\,States\,/\,{\mathop{\rm%20Cos}\nolimits}%20t\,of\,{\mathop{\rm%20Re}\nolimits}%20venue\,from\,Operations}{Average\,Debtor\,/\,Average\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivables\,}$ Students can solve NCERT Class 12 Accountancy Accounting Ratios MCQs Pdf with Answers to know their preparation level. Trade Receivables Turnover Ratio = Net Credit Revenue from Operations / Average Trade Receivables 3,00,000 = 4 times, From the following information, calculate –. Accounting Ratios: L-5 | Activity or Turnover Ratios | Class 12 Accounts PDF Notes | V Commerce. Chapter-wise NCERT Accountancy Book Part 1 for Class 12 in English 2. It shown the relationship between Net Credit Purchases and Average Creditors/Average Trade Payables (Creditors + Bills Payable). CLASS 12 ACCOUNTANCY RATIOS NOTES 2; Thumbnails Document Outline Attachments. (a) Gross Profit Ratio: Gross profit ratio as a percentage of revenue from operations is computed to have an idea about gross margin. It determines ease with which a company can pay interest expense on outstanding debt. Liquidity Assets = Current assets − (Inventories + Prepaid expenses + Advance tax) 20,000 + Rs. Financial statement analysis Class 12 Notes Accountancy in PDF are available for free download in myCBSEguide mobile app. Free PDF download of Class 12 Accountancy Chapter 13 - Accounting Ratios Quick Revision Notes & Short Key-notes prepared by our expert Accountancy teachers from … tex: {  Carriage inwards = 4,000, Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory  Creditors on 31.3.2015 = 1,30,000 3. Cash Flow Statement. Accounting For Debentures - Company Accounts 9. }; Your email address will not be published. Total assets = shareholder funds + total debts (liabilities). (i)... 2. 2. 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