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PPT - Accounting Ratios | Accountancy Class 12 - Commerce PDF Download

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FAQs on PPT - Accounting Ratios - Accountancy Class 12 - Commerce

1. What are accounting ratios?
Ans. Accounting ratios are quantitative measures used to evaluate and analyze a company's financial performance. They provide insights into various aspects of a company's operations, such as profitability, liquidity, efficiency, and solvency.
2. How are accounting ratios calculated?
Ans. Accounting ratios are calculated by dividing one financial metric by another. For example, the current ratio is calculated by dividing current assets by current liabilities. Each ratio provides a unique perspective on a company's financial health.
3. Why are accounting ratios important for businesses?
Ans. Accounting ratios are important for businesses as they help in assessing performance, identifying trends, comparing against industry benchmarks, making informed decisions, and communicating with stakeholders. They provide a comprehensive view of a company's financial health.
4. What are the different types of accounting ratios?
Ans. There are various types of accounting ratios, including liquidity ratios (e.g., current ratio), profitability ratios (e.g., return on equity), efficiency ratios (e.g., asset turnover), and solvency ratios (e.g., debt-to-equity ratio). Each type of ratio focuses on a different aspect of a company's financial performance.
5. How can accounting ratios be used to make financial decisions?
Ans. Accounting ratios can be used to make financial decisions by providing insights into a company's financial position, profitability, and efficiency. By analyzing these ratios, businesses can identify areas of improvement, assess risk, and make informed decisions to drive financial success.
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