Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Accounting Ratios NCERT Solutions | What do you mean by Ratio Analysis?

The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.

The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?

What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover

What are liquidity ratios? Discuss the importance of current and liquid ratio.

What are various types of ratios?

How would you study the Solvency position of the firm?

The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days’ sales in inventory. Why?

What are important profitability ratios? How are these worked out?

List the techniques of Financial Statement Analysis.

State the meaning of financial statement analysis?

What does a Bearer Debenture mean?

Distinguish between Vertical and Horizontal Analysis of financial data.

What are limitations of financial statement analysis?

State the meaning of ‘Debentures issued as a collateral security’.

State the meaning of Analysis and Interpretation.

List any three objectives of analysing financial statements?

What is meant by ‘Issue of debentures for consideration other than cash’?

Under which head is the ‘Debenture Redemption Reserve’ shown in the balance sheet?

What do you understand by analysis and interpretation of financial statements? Discuss its importance.

Can the company purchase its own debentures?

Explain how common size statements are prepared giving an example.

How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles                                                                        (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress

What is meant by ‘Mortgaged Debentures’?

What is meant by redemption of debentures?

Explain the process of preparing income statement and balance sheet.

‘Financial statements reflect a combination of recorded facts, accounting
conventions and personal judgements’ discuss.

Explain in detail about the significance of the financial statements.