There is a close relationship between the profit and the efficiency with which the resources employed in the business are utilised. Creditors Turnover Ratio/Trade Payable Turnover Ratio: Accounting Ratios. This PDF file for class 12 Accounts subject's Accounting Ratios topic contains brief and concise notes for … NCERT Book Class 12 Accountancy – II Chapter 5 Accounting Ratios RBSE Class 12 Accountancy Chapter 10 Very Short Answer Questions. 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 203 the financial statements, it is termed as accounting ratio. 11. The profitability or financial performance is mostly summed up in the statement of profit and loss. It also contains solved questions… Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio Analysis and Cash Flow Statements with Conclusion) 4. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Proprietary Ratio 70,000 2 = Rs. Debt = Debentures + Long term provisions = 75,000 + 25,000 = 1,00,000 Easier to obtain loans A high ratio indicates that = Rs. (d). Trade Receivables Turnover Ratio = Net Credit Revenue from Operations / Average Trade Receivables Limitations of Ratio Analysis: i. Debtors Turnover Ratio/Trade Receivables Turnover Ratio: Gross Profit Ratio : It shows the relationship between Gross Profits and Net Sales i.e., Net Revenue from Operation. 20,000 + Rs. 1-b, 2-b, 3-c. 60,000 Accounting for Not-For-Profit Organisation 7. Capital Employed = Total Assets – Current Liabilities. From the following information, calculate inventory turnover ratio: Inventory in the beginning = 18,000 Significance: It assesses the long term soundness of financial position of a business. Calculate ‘Liquidity Ratio’ from the following information: Current liabilities = Rs. Current Ratio = Current Assets / Current Liabilities = 2, 00,000 / 1, 00,000 = 2 : 1 Gross Profit Ratio = Gross Profit / Revenue from operation × 100 18,000 + Rs. Long term debts = total debts (Liabilities) − Current Liabilities Working Capital Turnover Ratio : It establishes the relationship between (d) Working Capital Turnover Ratio: It reflects relationship between revenue from operations and net assets (capital employed) in the business. This ratio indicates the margin of operating profits available on Revenue form Operations to cover non operating... 2. It shows the relationship between Net profit before interest, Tax and Divided and Capital Employed of the business. Download All DK Goel Textbook solutions for class 12 Accountancy Volume 2 chapter 5 to understand all concepts in deatils. Gross Profit Ratio = Gross Profit/Net Revenue from Operations × 100 1,30,000 + Rs. 3. This Ratio is calculated in Times. = Rs. 5,000) Operating Expenses = Office and Administration Expenses +Selling and Distribution Expenses + Depreciation+ Bad debts + Discount on Debtors + Interest on Short term loans. 12 Accounting for Labour. 2. Accounting For Debentures - Company Accounts 9. Next. Dec 18, 2020 - Ratios (Important Questions) : Accountancy Class 12 Class 12 Notes | EduRev is made by best teachers of Class 12. All the solutions of Accounting Ratios - Accountancy explained in detail by … (d) Interest Coverage Ratio: It is a ratio which deals with the servicing of interest on loan. Trade Payables Turnover ratio = Net Credit purchases / Average trade payable To know more, stay tuned to BYJU’S. 2 Statement of Changes in Financial Position. 18,000 + Rs. 3. 3. 5,000. NOTES. (i)... 2. Debt-Equity Ratio = Long term Debts / Shareholders' Funds, Shareholders’ Funds (Equity) = Share capital + Reserves and Surplus + Money received against share warrants These ratios are used to assess the profitability or earning capacity of the business. 80,000 = 4 times. 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. = Net Credit Revenue Form Operations / Average Inventory Profitability Ratio: Free PDF download of Class 12 Accountancy Chapter 13 - Accounting Ratios Quick Revision Notes & Short Key-notes prepared by our expert Accountancy teachers from … Classification of Ratios : Accounting ratios are used to analyse the financial position of the firm. 3. (e) Return on Capital Employed or Investment: Capital employed means the long-term funds employed in the business and includes shareholders’ funds, debentures and long-term loans. If the performance of different units belonging to the same firm is to be compared, then it is called 'intra-firm comparison'. = Rs. Answer Key. 1,50,000 = Rs. OR If excess of current assets over quick assets represented by inventories is Rs. 4. 1. (b) Trade Receivables Turnover Ratio: It expresses the relationship between credit revenue from operations and trade receivable. 4. Debt Equity Ratio: It show relationship between Debts (Long term Liabilities or Non Current Liabilities) and Equity (Shareholders’ Funds). = Rs. T. S. Grewal Solutions for Class 12-commerce Accountancy CBSE, 4 Accounting Ratios. 5,000) = Rs. 40,000 + Rs. A ratio may be expressed in the following ways: (1) 'Proportion' or Pure Ratio or Simple Ratio: Net Profit before tax = Net profit after tax × 100/ (100 − Tax rate) Average Trade Receivable =$\frac{(Opening\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivable%20+%20Clo\sin%20g\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivables)}{2\,}$ Capital Employed = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Working Capital This subject records, allocates and outlines the transactions of a business. Total Debts (Liabilities) Rs. = 20,000 + 40,000 + 40,000 = 1, 00,000, It is the ratio of quick (or liquid) asset to current liabilities. average collection period 360 or 365 days divided by the receivables turnover ratio. 80,000 = Rs. 1. Significance: It measures the safety margin available to the providers of long term loans. Generally a higher ratio indicates better profitability. This ratio indicates the margin of operating profits available on Revenue form Operations to cover non operating expenses such as indirect Expenses and Financial Expenses. This ratio indicates whether investment in stock is within proper limit or not. Operating Ratio Current liabilities include short-term borrowings, trade payables (creditors and bills payables), other current liabilities and short-term provisions. 3. Generally a higher ratio indicates efficient use of working capital. ... Accounting Ratios. OR 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. It expresses the relationship between the cost of revenue from operations and average inventory. Cost of Revenue from Operations = Inventory in the beginning + Net Purchases + Wages + Carriage inwards − Inventory at the end 20,000 = 3 Times. 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. 4. Cost of Revenue from Operations = 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 OR Operating Ratio =$\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\rm%20Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ This ratio indicated the number of times the trade receivables are turned in relation to credit sales over a year. Total assets = shareholder funds + total debts (liabilities). 3 Cash ... 9 Financial Statement Analysis. Shareholders’ funds Rs. 2. Chapter 5 Accounting Ratios. Accounting Ratios L-4 | Solvency Ratios ( Part-2) | Class 12 Accounts PDF Notes | Vedantu. Inventory Turnover Ratio : It is also called as Stock turnover ratio. The important Profitability ratios are: 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. OR These are the final accounts prepared at the end of the accounting period and include balance sheet and statement of profit and loss along with notes … 2. = Rs. Accounting ratios are widely used for such comparisons. Tax Rate = 40% 73,000 + Rs. Current Ratio = $\frac{Current\,Assetors\,Liquid\,Assets}{Current\,Liabilities}$ of days/month in a year ÷Trade Payables Turnover Ratio. OR Average Inventory = Inventory in the beginning + Inventory at the end / 2 Significance: It reveals the number of times interest on long-term debts is covered by the profits available for interest. Revision Notes for CBSE Class 12 Accountancy Chapter 13 – Free PDF Download. = 3.5: 1 This ratio indicates whether the c… MathJax = { 2. 4,00,000 × 20 / 100 = Rs. Net Credit Purchases = Total Purchases – Purchases Return/Returns Outwards Cash Purchases Solvency Ratios Solvency ratios judge the long-term financial position of an enterprise i.e. 3. Creditors Turnover Ratio/Trade Payables Turnover Ratio Introduction. Answer. Interest Coverage Ratio = Net Profit before Interest and Tax / Interest on long-term debts. 11 Accounting for Material. 16,000 (c) Trade Payable Turnover Ratio: Trade payables turnover ratio indicates the pattern of payment of trade payable. NCERT Solution For Class 12 Accountancy Chapter 5 – Accounting Ratios furnishes us with an all-inclusive data to all the concepts. Ratios help with the planning and forecasting of the firm’s business activities for periods as ratios tend to have predictor values. Current assets = Rs. Liquidity Assets = Current assets − (Inventories + Prepaid expenses + Advance tax) Download NCERT Class 12 Accountancy Accounting Ratios NCERT Book and other CBSE KVS Accountancy latest books free in pdf format chapter wise, NCERT Class 12 Accountancy Accounting Ratios.Download NCERT Chapters and Books in pdf format. = Rs. = Rs. These show rotation of concerned item within an accounting period. Accounting Grade 12 www.learnxtra.co.za Brought to you by Page 5 12. Tricks on Accounting Ratios - Day 4. These ratios measure the efficiency of asset management and measure the effectiveness with which an enterprise uses resources at its disposal. 46,000 + Rs. Carriage inwards = 4,000, Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory 5. 3,40,000 × 100 = 64.71% Even the teachers refer to textbooks while preparing the final question paper of Class 12 Accountancy. Using TS Grewal Class 12 solutions Accounting Ratios exercise by students are an easy way to prepare for the exams, as they involve solutions arranged … All books are in clear copy here, and all files are secure so don't worry about it. The entire NCERT textbook questions have been solved by best teachers for you. = Rs. Quick Assets = Current Assets – Other Current Assets Inventory at the end = 22,000 DK Goel Solutions for Class 12 DK Goel Solutions Accountancy furnishes a wide range of solutions that certainly supports the students to understand, analyse and solve them. These ratios indicate the speed at which, activities of the business are being performed. 80,000 − (Rs. Creditors on 31.3.2015 = 1,30,000 5. Required fields are marked *. To assess the operating efficiency of the business. Generally a higher ratio indicates better profitability. 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. Nov 19, 2020 • 1h . 1. $\frac{Average\,Inventory}{Stock}\,%20=%20\,\frac{Opening\,Inventory%20+%20Clo\sin%20g\,Inventory}{2}$ Inventories = Rs. Net Profit Ratio : It shows the relationship between Net Profits and Net Sales i.e., Net Revenue from Operations. Debt Equity Ratio inlineMath: [['$', '$'], ['\\(', '\\)']] Since interest is a charge on profit, net profit taken to calculate this ratio is before interest & tax. Check the below NCERT MCQ Questions for Class 12 Accountancy Chapter 10 Accounting Ratios with Answers Pdf free download. All you need of Commerce at this link: Commerce Accounting Ratios CBSE Quick Revision Notes and Chapter Summary Class-12 Accountancy Part - B - Accounting Ratios. If details regarding opening and closing values of trade receivable are not given then closing trade receivables are used for calculation of this ratio. If details regarding opening and closing values of trade payables are not given then closing trade payables are used for calculation of this ratio. Trade Receivables Turnover Ratio = Net Credit Revenue from operation / Average Trade Receivable, Average Collection Period = 365 / Trade Receivables Turnover Ratio = 365 / 8.18 = 45 days, Trade Payable Turnover Ratio = Purchases / Average Trade Payables, Chapter 1 - Accounting for Partnership Firms Fundamental, Chapter 2 - Accounting for share capital, Chapter 6 - Change in profit sharing Ratio for Existing, Chapter 7 - Dissolution of a partner firm, Chapter 8 - Financial statement analysis, Chapter 9 - Financial statements of Not-for-profits, Chapter 10 - Financial statements of a company, Chapter 11 - Goodwill Nature and Valuation, Chapter 14 - Retirement, Death of a partner, STUDY MATERIAL FOR CBSE CLASS 12 ACCOUNTS. Operating Profit = Net Profit + Non Operating Expenses – Non-Operating Income 3,00,000 + Rs. Cash Revenue from operations = 20% of Rs. 3,20,000 1. Average Trade Receivable = 2,20,000 / Rs. 1. Following information is available for the year 2014-15, calculate gross profit ratio: Revenue from Operations = Cash Revenue from Operations + Credit Revenue from Operation Capital Employed = Non Current Assets + Working Capital 60,000/ Rs. Objective & Significance-Objective is to ascertain the amount of profit available to cover the interest charge. Gross Profit = Revenue from Operations − Cost of Revenue from Operation Your email address will not be published. It is expressed in number of times. We have provided Accounting Ratios Class 12 Accountancy MCQs Questions with Answers to help students understand the concept very well. Rishab Jolly. 2,20,000 The ratios can be used to evaluate the financial condition of a company, including the company’s strengths and weaknesses. Current Ratio is used to compare the current assets to current liabilities of the business. The document Chapter Notes - Accounting Ratios Commerce Notes | EduRev is a part of the Commerce Course Accountancy Class 12. Home ; Grade 12 ; Account; Back to subjects. 1. Net Credit Sales = Total Sales – Sales Return i.e., Returns inwards – Cash Sales 24,000 = 1.5x 1. ∴ Inventory Turnover Ratio = Rs. It is calculated as under: Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100, Operating Profit = Revenue from Operations − Operating Cost. Important Points Net Profit = Operating Profit – Non Operating Expenses + Non Operating Income Financial Statements are used for analysis, comparison and interpretation purpose. Inventories = Current assets − Quick assets Operating Profit Ratio : It shows the relationship between Operating Profit and Net Sales i.e., Net Revenue form Operations. Interest Coverage Ratio Interest Coverage Ratio = Net Profit before Interest and Tax/Interest on long-term debt Cost of Material Consumed = Raw Material Purchased + Changes in inventory of Raw Material Generally a higher ratio indicate better profitability. 2. Gross Profit = Revenue from Operations − Cost of Revenue from Operations It is a measure of security of interest payable on long-term debts. Current Liabilities = Rs. = Rs. (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. OR Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 14 Accounting Ratios. 1. OR 5. Class 12 Accountancy Notes PDF Download. 2,50,000/Rs. It is expressed as Quick ratio = Quick Assets: Current Liabilities or Quick Assets / Current Liabilities. It shown the relationship between Net Credit Purchases and Average Creditors/Average Trade Payables (Creditors + Bills Payable). Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses – Closing Stock Return on Investment or Return on Capital Employed. Average Trade Receivables = Opening Trade Receivables + Closing Trade Receivables / 2 3,00,000 24,000 = 3.5x − 2x This ratio indicated the number of times the working capital has been turned over in relation to revenue form operations over a year. A ratio may be expressed in the … Chapter 4 Accounting Ratios T S Grewal Solutions For Class by topperlearning.com. Ideal Ratio: No ideal ratio but a high ratio indicates higher safety to lenders and law ratio represents risky position from lender’s point of view. 5. Financial Statement Analysis 11. 2. = Rs. Net purchases = 46,000 Net Working Capital and Revenue from Operations i.e., Net Sales. Proprietary Ratio: It shows the relationship between Proprietors’ Funds/shareholders’ Funds and Total Assets of the business. Learn the concepts of Class 12 Accountancy Accounting Ratios with Videos and Stories. Trade Receivable/Debtors turnover Ratio = $\frac{Net\,Credit\,States\,/\,{\mathop{\rm%20Cos}\nolimits}%20t\,of\,{\mathop{\rm%20Re}\nolimits}%20venue\,from\,Operations}{Average\,Debtor\,/\,Average\,Trade\,{\mathop{\rm%20Re}\nolimits}%20ceivables\,}$ Trade Payable/Creditors turnover Ratio = It is used for determining the paying capacity of the company towards its short term liabilities. tex: { Free PDF download of Important Questions for CBSE Class 12 Accountancy Chapter 13 Accounting Ratios prepared by expert Accountancy teachers from latest edition of CBSE(NCERT) books, On CoolGyan.Org to score more marks in CBSE board examination. ∴ Trade Payables Turnover Ratio = Rs. 350000 (4) Reserve and Surplus: Rs. Equity/Proprietors’ Funds = Fixed Assets (Tangible and intangible) + Non Current investments (Excluding Non Trading investment) + Long Terms Loans and Advances + Current Assets – Current Liabilities – Long – term borrowings – Long term provisions. 114 Questions - 0 Concepts. This document is highly rated by Class 12 … 24,000, calculate current assets and current liabilities. 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. 2,40,000 = Rs.10,000/Rs.1,00,000 × 100 = 10%. = Rs. Account. Current Ratio = Current assets : Current liabilities 18,00,000 16,000 = Rs. Interest on Long-term Debt = 15% of Rs. Generally a lower Ratio indicates better cost management and profitability. = Rs. 16,000 = 2 : 1. Operating Ratio = Operating Cost / Net Revenue from Operations × 100 2. inventory turnover ratio the cost of goods sold for a year divided by the average inventory during It expresses the relationship between profits available for payment of interest and the amount of interest payable. Ratio It is an arithmetical expression of relationship between two related or interdependent items. This class will be helpful for the candidates appearing for Class 12. 3. Current Assets = Trade Receivables (sundry Debtors) + prepaid Expenses + cash and cash Equivalents + short term Investments + inventories Current Liabilities/ Liquid Assets. Cbse Class 12 Accountancy Revision Notes For Accounting by coolgyan.org. 1. 1,00,000 + Rs. fontCache: 'global' Explain the meaning of financial statement. Profit refers to the Profit before Interest and Tax (PBIT) for computation of this ratio. Accounting Ratios … Total Assets To Debt Ratio = $\frac{Total\,Assets}{Debts\,or\,Long\,Liabilities}$ 2,40,000 / Rs. 50,000 / 50,000 = 1 : 1. Gross Profit Ratio Net Profit Ratio = Net profit / Revenue from Operations × 100. = Rs. Topic 1: Introduction 1. Ratio It is an arithmetical expression of relationship between two related or interdependent items. Total Assets = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non trading Investment) +long Term Loans and Advances + Current Assets 2. Find: Previous. 1,00,000 − Rs. Useful tool for analysis of financial statements. The document Chapter Notes - Accounting Ratios Commerce Notes | EduRev is a part of the Commerce Course Accountancy Class 12. 2. receivables turnover ratio credit sales for a year divided by the average balance in accounts receivable during the same year. 50,000 The document Accounting Ratios (Part - 3) Notes | EduRev is a part of the Commerce Course TS Grewal Solutions - Class 12 Accountancy. Average Payment Period = No. Generally lower ratio indicates that more credits are available for a longer period. 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. Operating Profit = Net Revenue from Operations – Operating Cost Quick Ratio = Quick assets : Current liabilities These ratios are very important as profitability is the measurement of the overall performance and efficiency of the management. 15,000 + Rs. 10,000 and the ‘Revenue from Operations’ are Rs. Working Capital Turnover Ratio Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Accounts Accounting ratios. 2. 1. Proprietors’ Funds = Share Capital + Reserves and Surplus-Non Trading Investment Net Profit = Gross Profit – Operating Expenses – Non Operating Expenses + Non Operating Income 3. 10,000 Net Profit after Tax = Rs. 208k watch mins. Total Assets to Debt Ratio 2. Go to First Page Go to Last Page. 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 […] If profits after tax are given in the question then we will find profits before tax with the help of the following formula: Operating Cost = Cost of Revenue from Operations + Selling Expenses + Administrative Expenses The formula for its calculation is as follows: Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory. 4. This ratio indicated the number of times the Trade Payables are turned over in relation to credit purchases over a year. Comparitive and common size For evaluating the progress and future prospects of an organization, both quantitative and qualitative aspects are to … Operating Profit Ratio 1. Highlight all Match case. Capital Employed = fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Current Assets – Current Liabilities. The activity ratios express the number of times assets employed. Calculate Gross profit ratio and Operating ratio. Equity = Share Capital + General Reserve + Surplus = 1,00,000 + 45,000 + 30,000 = 1,75,000, (b) Total Assets to Debt Ratio This ratio measures the extent of the coverage of long-term debts by assets, Total assets to Debt Ratio = Total assets/Long-term debts. This subject records, allocates and outlines the transactions of a business. Liquid Assets OR Quick Assets/ Current Liabilities. 1. Credit Revenue from operations = Rs. 1,00,000 Debts = Long-term borrowing + Long-term provisions 3. Introduction. 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. 5,000 Changes in inventory = Opening Inventory – Closing Inventory 3. = Sales/Revenue from Operations – Gross Profit 73,000 90,000 345 Questions - 0 Concepts. } Easy to print and read. 3. Ratio is an arithmetical expression of relationship between two interdependent or related items. Presentation Mode Open Print Download Current View. 4. 4,00,000 Stock Turnover Ratio/Inventory Turnover Ratio A ratio is a mathematical number calculated as a reference to relationship of two or more numbers and can be expressed as a fraction, proportion, percentage and a number of times. It is better indicator of liquidity as some current assets are not easily convertible into cash. Operating Ratio + Operating Profit Ratio =1 4. 2,00,000. Login. It is computed as follows: Gross Profit Ratio = Gross Profit / Net Revenue of Operations × 100. Receivable are taken before deducting any Provision for Doubtful Debts. Accounting Ratios - Accountancy Notes, Questions and Answers, Free Study Material, Chapter wise Online Tests. Accounting Ratios Class 12. Net profit before interest and tax = Net profit before tax + Interest Generally a higher ratio indicates better profitability. Operating Ratio + Operating Profit Ratio =1 4. 2.Operating Ratio: It shows the relationship between Operating Cost and Net Sales i.e., Net Revenue from Operations. Ratios MCQs PDF with Answers were Prepared Based on the Latest Exam pattern and... Been allocated preparation level period 360 or 365 days divided by the receivables Turnover ratio: Ratios! 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