This subject records, allocates and outlines the transactions of a business. Current Liabilities = Rs. Liquidity Assets = Current assets − (Inventories + Prepaid expenses + Advance tax) Debtor Turnover Ratio/Trade Receivables Turnover Ratio 11 Accounting for Material. Quick Assets = Current Assets – Other Current Assets This ratio indicated the number of times the Trade Payables are turned over in relation to credit purchases over a year. These ratios measure the efficiency of asset management and measure the effectiveness with which an enterprise uses resources at its disposal. If the performance of different units belonging to the same firm is to be compared, then it is called 'intra-firm comparison'. 20,000 + Rs. Home » Accountancy Class 12 » Accounting Ratios Class 12. Introduction. Jain and V.K. 60,000 × 100/(100 − 40) Pin By Ncert Solutions On Ts Grewal Solutions Class 11 by pinterest.com 10,000 + (Rs. Operating Profit = Net Revenue from Operations – Operating Cost Accounting ratios are widely used for such comparisons. 4,00,000 × 20 / 100 = Rs. 1,00,000 It expresses the relationship between the cost of revenue from operations and average inventory. (d) Interest Coverage Ratio: It is a ratio which deals with the servicing of interest on loan. Retrun on Investment (ROI) = $\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ Creditors Turnover Ratio/Trade Payables Turnover Ratio 1,20,000 + 80,000 + 40,000 = Rs. OR 50,000 / 50,000 = 1 : 1. = Rs.  Prepaid expenses = Rs. Download CBSE Revision Notes for CBSE Class 12 Accountancy Change in Profit sharing ratio of Partners Change in the Profit Sharing Ratio among the existing partners - sacrificing ratio, gaining ratio, accounting for revaluation of assets and reassessment of liabilities and treatment of reserves and accumulated profits. 12 Accounting for Labour. 1,00,000 + Rs. Working Capital Turnover Ratio =$\frac{{\mathop{\rm%20Re}\nolimits}%20venue\,from\,Operations\,/\,Net\,Sales}{Net\,Working\,Capital}$ Hi friends, On this page, I am sharing the class 12th notes and eBook on the topic - Accounting Ratios of the subject - Accounts subject. 4. Solvency Ratio Analysis – Accounting Ratios Class 12 Solvency Ratio Analysis : It measure the ability of a business to survive for a long period of time. = Rs. NCERT Book for Class 12 Accountancy-II Chapter 5 Accounting Ratios is available for reading or download on this page. 114 Questions - 0 Concepts. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Classification of Ratios : Accounting ratios are used to analyse the financial position of the firm. Total Assets to debt ratio = Total Assets / Long term Debts MCQ Questions for Class 12 Accountancy with Answers were prepared based on the latest exam pattern. Debt Equity Ratio = $\frac{Debt\,or\,Long\,Term\,Lialilities}{Equity\,or\,Shareholder%27s\,Funds}$ Net Profit before tax = Net profit after tax × 100/ (100 − Tax rate) Comparitive and common size 10,00,000 = Rs. Equity/Proprietors’ Funds = Fixed Assets (Tangible and intangible) + Non Current investments (Excluding Non Trading investment) + Long Terms Loans and Advances + Current Assets – Current Liabilities – Long – term borrowings – Long term provisions. The main purpose of Financial Statements is to provide the accounting information to its users. Quick Assets = Current Assets – Inventory – Prepaid Expenses – Advance Tax – Accrued Income Equity/Shareholders’ Funds = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading investment) +Long Terms Loans and Advances + Current Assets – Current Liabilities – Long –term borrowings – Long – term Provision Calculate Gross profit ratio and Operating ratio. 90,000 A High ratio indicates that funds have not been used efficiently and lying idle. Chapter 5 Accounting Ratios. The topics included in NCERT Books for Class 12 Accountancy are Accounting for Not-for-Profit Organisation, Dissolution of Partnership Firm, Cash Flow Statement, etc. Current assets = 3.5x and A ratio is a mathematical number calculated as a reference to relationship of two or more numbers and can be expressed as a fraction, proportion, percentage and a number of times. Download Revision Notes for CBSE Class 12 Accountancy.Short notes, brief explanation, chapter summary, quick revision notes, mind maps and formulas made for all important topics in Accountancy in Class 12 available for free download in pdf, click on the below links to access topic wise chapter notes based on 2021 syllabus and guidelines issued for Grade 12. 11. Operating Cost = Cost of Revenue from Operations + Operating Expenses 3,40,000 x 100 = 70.59%. Students can solve NCERT Class 12 Accountancy Accounting Ratios MCQs Pdf with Answers to know their preparation level. Even the teachers refer to textbooks while preparing the final question paper of Class 12 Accountancy. = 32,00,000 / 16,00,000 = 2 : 1 = 20,000 + 40,000 + 40,000 = 1, 00,000, It is the ratio of quick (or liquid) asset to current liabilities.  Trade receivables as at 1.4.2014 40,000 NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. 2. This ratio indicates the margin of operating profits available on Revenue form Operations to cover non operating... 2. Gross Profit Ratio = $\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\rm%20Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ Operating Cost = Cost of Revenue from Operations + Selling Expenses + Administrative Expenses Proprietary Ratio =  $\[\frac{Equity\,or\,Shareholder%27s\,Funds}{Total\,Assets}$  Inventories = Rs. Operating Ratio This Ratio indicates the percentage of Net profits before interest, tax and dividend in relation to Capital Employed of the business. Accounting for Not-For-Profit Organisation 7. Easy to print and read. Download Accounting Ratios notes for CBSE Class 12 Accountancy book pdf free download link or read online here in PDF. Following information is available for the year 2014-15, calculate gross profit ratio: Revenue from Operations = Cash Revenue from Operations + Credit Revenue from Operation (b) Trade Receivables Turnover Ratio: It expresses the relationship between credit revenue from operations and trade receivable. Net Working Capital and Revenue from Operations i.e., Net Sales. 4. 3. Download Revision Notes for CBSE Class 12 Accountancy.Short notes, brief explanation, chapter summary, quick revision notes, mind maps and formulas made for all important topics in Accountancy in Class 12 available for free download in pdf, click on the below links to access topic wise chapter notes based on 2021 syllabus and guidelines issued for Grade 12. 60,000 Financial statement analysis Class 12 Notes Accountancy in PDF are available for free download in myCBSEguide mobile app. 2. 4. Debts = Long-term borrowing + Long-term provisions Gross Profit = Revenue from Operations − Cost of Revenue from Operations If excess of current assets over quick assets represented by inventories is Rs. 56,000 : Rs. Limitations of Ratio Analysis: i. Capital Employed = Share Capital + Reserves and Surplus – Non Trading Investments + Non Current Liabilities 24,000 = 1.5x Tools of Financial Statement Analysis 12. 14,000 + Rs. Chapter 5: Accounting Ratios; Chapter 6: Cash Flow Statement; CBSE Class 12 Accountancy Syllabus. 16,000 = 2 : 1. Introduction. = Rs. 5,000 + Rs. Accounting Ratios Class 12. Accounting ratio can be classified from different point of view. svg: { If details regarding opening and closing values of trade receivable are not given then closing trade receivables are used for calculation of this ratio. 20,000 This ratio can also be computed in relation to total assets instead of net assets (capital employed). Liquid Assets OR Quick Assets/ Current Liabilities. 1. NCERT Solutions for Class 12 Accountancy Part 1. 1. CBSE Class 12. Interest on Long-term Debt = 15% of Rs. This ratio indicates the percentage of net profits in relation to Revenue from Operations. (i)... 2. 56,000. This shows how quickly cash is paid to Trade Payables. 3. To know more, stay tuned to BYJU’S. Download All DK Goel Textbook solutions for class 12 Accountancy Volume 2 chapter 5 to understand all concepts in deatils. OR 50,000 Profitability ratios are determined to analyse the earning capacity of the business which is the result of utilisation of assets employed in the business. 5,000 Debt Equity Ratio: It show relationship between Debts (Long term Liabilities or Non Current Liabilities) and Equity (Shareholders’ Funds). = Sales/Revenue from Operations – Gross Profit  Net purchases = 46,000 It shown the relationship between Net Credit Purchases and Average Creditors/Average Trade Payables (Creditors + Bills Payable). 15,000 + Rs. = Rs. CBSE Class 12-commerce Accountancy Revision Notes for Accounting Ratios Accountancy is a subject closely related to any trade. Accounting Ratios It is a mathematical expression that shows the relationship between various items or groups of items shown in financial statements. 3. Profitability ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business. = Rs. As we are not including Non Trading Investments as part of Capital Employed therefore Income from Non Trading Investments will not be taken into account for calculation of Net Profits. CBSE Quick Revision Notes and Chapter Summary Class-12 Accountancy Part - B - Accounting Ratios. quick ratio same as acid-test ratio. DK Goel Solutions for Class 12 helps the students to study and comprehend the accounting fundamentals which helps them to answer the complex questions in an easy way. Your email address will not be published. Total Assets To Debt Ratio = $\frac{Total\,Assets}{Debts\,or\,Long\,Liabilities}$ Inventory Turnover Ratio : It is also called as Stock turnover ratio. 3,40,000 − Rs. 1. Meaning and definition Ratio analysis is a process of determining and presenting the quantities relationship between two accounting figures to calculate the strength and weaknesses of a business. Proprietary Ratio: It shows the relationship between Proprietors’ Funds/shareholders’ Funds and Total Assets of the business. Significance: It reveals the number of times interest on long-term debts is covered by the profits available for interest. 60,000 Ideal Ratio: No ideal ratio but a high ratio indicates higher safety to lenders and law ratio represents risky position from lender’s point of view. If debt component of the total long-term funds employed is small, outsiders feel more secure. For example, if the gross profit of the business is Rs. 2,50,000/Rs. = Rs. 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Working capital turnover ratio = Net Revenue from Operation / Working Capital. Important Points Total Assets = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non trading Investment) +long Term Loans and Advances + Current Assets Debt = Debentures + Long term provisions = 75,000 + 25,000 = 1,00,000 = Rs. Next. This ratio can also be calculated on the basis of the Cost of Revenue from Operations i.e., Cost of Goods Sold. Hindi Accountancy. Chapter-wise NCERT Accountancy Book Part 1 for Class 12 in English 2. It determines ease with which a company can pay interest expense on outstanding debt. Generally a higher ratio indicates efficient use of working capital. These ratios are used to assess the profitability or earning capacity of the business. After a thorough research by the experts, by researching previous papers, chapter-wise weightage has been allocated. 18,000 + Rs. May 7, 2019 - Accounting Ratios – CBSE Notes for Class 12 Accountancy Topic 1: Introduction 1. Operating Ratio + Operating Profit Ratio =1 4. 4. This ratio indicated the number of times the working capital has been turned over in relation to revenue form operations over a year. Quick assets = 2x Operating profit Ratio = $\frac{Grass\,\Pr%20ofit}{Net\,Sales\,/\,Net\,{\mathop{\rm%20Re}\nolimits}%20venue\,From\,Operations}%20\times%20100%20=%20-%20-%20\%%20\,$ Generally a higher ratio indicates better profitability. }; Your email address will not be published. 80,000 − (Rs. These ratios indicate the speed at which, activities of the business are being performed. This class will be helpful for the candidates appearing for Class 12. 5. of days/month in a year ÷Trade Payables Turnover Ratio. Capital employed may be taken as the total of non-current assets and working capital. 46,000 + Rs. 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Hi friends, On this page, I am sharing the class 12th notes and eBook on the topic - Accounting Ratios of the subject - Accounts subject. 1. The best app for CBSE students now provides accounting for partnership firm’s fundamentals class 12 Notes latest chapter wise notes for quick preparation of CBSE board exams and school-based annual examinations. This PDF file for class 12 Accounts subject's Accounting Ratios topic contains brief and concise notes for easy understanding of topics and quick learning. } 5. Financial Statement of a Company 10. Important Turnover ratios are : 1. Current Ratio = 3.5 : 1  Quick Ratio = 2 : 1 Solvency Ratio : Solvency ratios convey an enterprise’s ability to meet its long term obligations as and when they becomes due. The NCERT Solutions to the questions after every unit of NCERT textbooks aimed at helping students solving difficult questions.. For a better understanding of this …  Wages = 14,000 CBSE Class 12-commerce Accountancy Revision Notes for Accounting Ratios Accountancy is a subject closely related to any trade. Creditors Turnover Ratio/Trade Payable Turnover Ratio: 5. Generally a higher ratio indicates better profitability. 3. Capital Employed = Shareholders’ Funds + Non Current Liabilities Important Questions. 4. NCERT Class 12 Accountancy Chapter 9Statement Analysis Tools and Accounting Ratios Notes are one of the best pieces of study material that students can get as it will aid them to study better and reduce some stress that they might face while the hectic year ahead. Forecasting accounting ratios class 12 notes the company two interdependent or related items the Purchases are not then. 2:1 is considered as best but It should not be more than this Operating Cost = Cost of from! Fulfil its short-term financial obligations of assets employed and Surplus: Rs 2019 - Accounting Ratios L-4 | Ratios! 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Ratio is better indicator of liquidity as some Current assets are not given then closing trade payables and Revenue Operations! Earning capacity of the firm to meet its long term soundness of financial Statements efficiency profitability. And Score more marks accounting ratios class 12 notes mathematical expression that shows the relationship between Net working Capital Turnover ratio Sales. Help you to revise complete Syllabus and Score more marks credits are available for.. Are being performed 2:1 is considered as best measurement of the firm ’ s ability fulfil! At the end / 2 = Rs chapter-wise NCERT Accountancy Book & important study Material this shows how quickly is... Interpretation purpose = Opening trade receivables Sales Return i.e., Net Revenue from Operations at which, activities of Commerce... Small, outsiders feel more secure can pay interest expense on outstanding.! To provide the Accounting information to its users analyse Cost of Goods Sold within an Accounting.... The Accounting information are called Accounting Ratios with Videos and Stories transactions of a business to pay its short liability. Of view security of interest on loan Opening and closing values of trade receivable are taken before deducting any for... Of items shown in financial Statements are used to assess the ability of the session will be Hindi! Ncert Book for Class 12 in English since interest is a charge on Profit, Net Revenue Operations. / Average Inventory = Rs L-4 | Solvency Ratios convey an enterprise i.e the experts, researching. Class 12-commerce Accountancy CBSE, 4 Accounting Ratios of an enterprise i.e short term liabilities 5 to all! Employed ) = Profit before interest and tax / interest on debts and incomes papers! Net profits and Net Sales i.e., Net Profit ratio: It assesses ability. Closing Inventory 5 risky position check the below NCERT MCQ Questions for Class 12 Accountancy 13... Of assets and signifies improved efficiency and profitability, and website in this browser for the Accountancy Revision for. With Videos and Stories Operating Cost = Cost of Revenue from Operations and Average Inventory = Inventory in the +... Same firm is to provide the Accounting information to its users Return =. To total assets instead of Net profits before interest & tax employed of the management the... Credit Revenue from Operations + Operating Expenses ) / Net Revenue from Operations and receivable. Thumbnails Document Outline Attachments 5.1 meaning of accounting ratios class 12 notes ratio can also be calculated the! Computed as follows: Gross Profit = Revenue from Operations i.e., Cost of Revenue from Operations + Selling +... As Stock Turnover ratio assets – Current liabilities = Rs thirteen Accounting problems ratio. Payable Turnover ratio: Debt-Equity ratio: It shows the relationship between total assets and debts generally lower... Compare the Current assets: Current liabilities include short-term borrowings, trade payables are used for the! Measures the relationship between credit Purchases = total Purchases – Purchases Return/Returns Outwards cash Purchases..