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Answer Posted / anish agarwal
RATION ANALYSIS HELPS IN COMPARISION OF BUSINESS OPERATIONS
TO A SIMILAR BSNS IN SAME INDUSRTY. ITS HELPS IN DECISION
MAKING AND ALSO TO SOLVE THOSE PROBS WHICH ARE TO BE FACED
IN FUTURE .
LIQUIDITY RATIOS
1. CURRENT RATIO : TOTAL CURRENT ASSETS / TOTAL CURRENT LIAB
2.QUICK RATION : CASH + RECEIVABLES+GOV SECURITY/ TOTAL CL
3.WORKING CAPTITAL RATIO : TCURRENT ASSETS-TCURRENT LIABS.
4.LEVERAGE RATIO-TOTAL LIAB/NET WORTH
INCOMENT STATEMENT RATIO ANALYSIS
GP RATIO GP/SALES
NP RATIO NP AFTER TAX/SALES
MANAGMENT RATIOS
INVENTORY TURNOVER RATIO = NET SALES/AVG INV AT COST.
ACC RECEIVABLES RATIO= ACC REC / DAILY CREDIT SALES
ASSET RETURN RATIO= NP BEFORE TAX / TOTAL ASSETS
RETURN ON INVESTMENT=NP BEFORE TAX / NET WORTH
| Is This Answer Correct ? | 5 Yes | 1 No |
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From the following find out a. Profit Volume ratio b. Break even point c. Sales for 40% P/V Ratio d. Margin of safety from the sales Rs 3,00,000 e. Net profit from the sales of Rs 3,00,000 f. Required sales for the new profit of Rs 70,000 g. Required sales for the net profit of Rs 70,,000 after tax, the corporate income tax being 40% h. Additional sales required to convert an increase of Rs 3000 p.a. in the sales manager salary Sale 2,00,000 Variable Overheads 1,50,000 Profit 50000 Fixed overheads 15000 Net profit 35000 Sl No Heads of Account Debit Rs Credit Rs 1 Drawing and Capital 750 15,000 2 Stock as on 01.01.2009 69720 3 Bills Receivable and bills payable 1000 1180 4 Returns 300 320 5 Purchases and Sales 4500 8300 6 Wages 70 7 Discount 30 8 Salaries 200 9 Canara Bank Shares 3000 10 Insurance 120 11 Building 3000 12 Furniture 700 13 Debtors and Creditors 600 1300 14 Cash in Hand 470 15 Overdraft at bank 900
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