Accounting Ratios || Class 12 || UP BOARD || VKP & CEZ скачать в хорошем качестве

Accounting Ratios || Class 12 || UP BOARD || VKP & CEZ

Accounting Ratios Accounting ratios are mathematical expressions that help analyze and interpret financial data. They provide insights into a company's financial performance, position, and prospects. Types of Accounting Ratios 1. *Liquidity Ratios*: Measure a company's ability to pay short-term debts. Current Ratio Quick Ratio Cash Ratio 2. *Profitability Ratios*: Evaluate a company's ability to generate profits. Gross Profit Margin Operating Profit Margin Net Profit Margin 3. *Efficiency Ratios*: Assess a company's ability to utilize its assets and resources. Asset Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio 4. *Solvency Ratios*: Measure a company's ability to pay long-term debts. Debt-to-Equity Ratio Interest Coverage Ratio Capital Gearing Ratio 5. *Market Ratios*: Evaluate a company's stock performance. Earnings Per Share (EPS) Price-Earnings (P/E) Ratio Dividend Yield Importance of Accounting Ratios 1. *Financial Analysis*: Accounting ratios help analyze financial statements and make informed decisions. 2. *Performance Evaluation*: Ratios evaluate a company's performance over time and against industry benchmarks. 3. *Investment Decisions*: Accounting ratios assist investors in making informed investment decisions. 4. *Creditworthiness*: Ratios help creditors assess a company's creditworthiness. Limitations of Accounting Ratios 1. *Comparability*: Ratios may not be comparable across industries or companies. 2. *Window Dressing*: Companies may manipulate financial statements to present a favorable ratio. 3. *Ignorance of Qualitative Factors*: Ratios focus on quantitative data, ignoring qualitative factors like management quality. Best Practices for Using Accounting Ratios 1. *Use Multiple Ratios*: Analyze a company's performance using a combination of ratios. 2. *Compare with Industry Benchmarks*: Compare a company's ratios with industry averages. 3. *Trend Analysis*: Analyze a company's ratios over time to identify trends. 4. *Consider Qualitative Factors*: Combine ratio analysis with qualitative factors like management quality and industry trends.