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’?

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

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

Can a company purchase its own debentures in the open market? Explain.

Describe the steps for creating Sinking Fund for redemption of debentures.

Differentiate between redemption of debentures out of capital and out of profits.

Explain the different terms for the issue of debentures with reference to their redemption.

Describe the meaning of ‘Debenture Issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?

Explain the different types of debentures?

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

What is meant by redemption of debentures by ‘Purchase in the Open Market’?