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Accounting Ratios

CBSE · Class 12 · Accountancy

Quick revision notes for Accounting Ratios — CBSE Class 12 Accountancy. Key concepts, formulas, and definitions for last-minute revision.

125 questions80 flashcards5 concepts

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Key Topics to Revise

1

1. Meaning, Use, and Classification of Ratios

  • A ratio is a mathematical number showing the relationship of two or more numbers.
  • Accounting ratios are derived from financial statements and help in financial statement analysis.
  • Ratio analysis is used to assess solvency, liquidity, efficiency, and profitability.
2

2. Liquidity Ratios

  • Liquidity ratios measure short-term solvency.
  • They show the ability of a business to meet current obligations.
  • The two important liquidity ratios are Current Ratio and Quick Ratio.
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3. Solvency Ratios

  • Solvency ratios are long-term ratios.
  • They measure the ability of a business to meet long-term obligations.
  • Important solvency ratios are Debt-Equity Ratio, Debt to Capital Employed Ratio, Proprietary Ratio, Total Assets to Debt Ratio, and Interest Coverage Ratio.
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4. Activity or Turnover Ratios

  • Activity ratios measure the speed and efficiency with which business resources are used.
  • They are also called turnover ratios or efficiency ratios.
  • Important activity ratios are Inventory Turnover Ratio, Trade Receivables Turnover Ratio, Trade Payables Turnover Ratio, and Net Assets or Capital Employed Turnover Ratio.

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Full Notes

Key Concepts

Ratio analysis studies the relationship betweenRatios are classified in two waysCurrent Ratio = Current Assets /Quick Ratio = Quick Assets /Debt

Frequently Asked Questions

What are the important topics in Accounting Ratios for CBSE Class 12 Accountancy?
Accounting Ratios covers several key topics that are frequently asked in CBSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Accounting Ratios — CBSE Class 12 Accountancy?
Understand the core concepts first, then work through the 125 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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