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
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Prepare a trial balance from the following :- Particulars Amount Particulars Amount Rs. Rs. Purchases 8225 Premium on lease 1200 Wages 1025 Loan on mortgage 2500 Sales 12450 Plant & machinery 2000 Arun's capital 13500 Provisn for doubtful debts 300 Stock on 1/1/98 1500 Sundry debtors 16550 Salary 410 Trade charges 200 Rent & taxes 162 Bad debts 200 Sundry creditors 2572
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