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.

How would you study the Solvency position of the firm?

What are various types of ratios?

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’?

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

What is meant by ‘Issue of debenture at discount and redeemable at premium?

Prepare the format of statement of profit and loss and explain its items.

What are Comparative Financial Statements?

Prepare the format of balance sheet and explain the various elements of balance sheet.

Explain the process of preparing income statement and balance sheet.

Explain in detail about the significance of the financial statements.

What is meant by conversion of debentures? Describe the method of such a conversion.

What are limitations of financial statement analysis?

State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors