Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Analysis of Financial Statement NCERT Solutions | State the importance of Financial Analys

Explain the usefulness of trend percentages in interpretation of financial performance of a company.

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

Describe the different techniques of financial analysis and explain the limitations of financial analysis.

Explain how common size statements are prepared giving an example.

What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.

State the meaning of Analysis and Interpretation.

List the techniques of Financial Statement Analysis.

What are Comparative Financial Statements?

What do you mean by Common Size Statements?

Distinguish between Vertical and Horizontal Analysis of financial data.

What do you mean by Ratio Analysis?

State the meaning of financial statement analysis?

What does a Bearer Debenture mean?

What are various types of ratios?

What are limitations of financial statement analysis?

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

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

List any three objectives of analysing financial statements?

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

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

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

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

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

What is discount on issue of debentures?

What does a Bearer Debenture mean?

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 are important profitability ratios? How are these worked out?