Ratio analysis problem notes pdf

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Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. From the following Balance Sheet and additional information, you are required to calculate: A company has capital of Rs. What is continue reading ratio analysis problem notes pdf on investment.

A high Inventory turnover ratio is better than ratio analysis low ratio.

At the same time, a higher ratio reflects efficient ratio analysis problem notes pdf activities. A low inventory turnover ratio is dangerous.

Ratio Analysis: Problems and Solutions | Accounting

Problem notes pdf is an indication of excessive inventory and over investment in inventory. A low ratio may be result of inferior quality goods, stock of un-saleable and absolute goods. A lower ratio reflects dull business and suggests that some steps should be taken to push up sales. Bad and doubtful debts and their provisions are not deducted from the total debtors in order to avoid the impression that a larger amount of receivables have been collected.

A turnover ratio of 8 signifies that debtors get converted ratio analysis problem notes pdf cash 8 times in a year. The ratio analysis problem notes pdf collection period of 1.

The average collection period ratio measures the quality of debtors since it indicates the rapidity or slowness of their collectability. The shorter the average collection period, the better the quality of ratio analysis problem notes pdf. The higher the Turnover Ratio and the shorter the average collection period, the ratio analysis problem notes pdf the trade credit management and ratio analysis problem notes pdf better the liquidity of debtors.

That is, high Turnover Ratio and short collection ratio analysis problem notes pdf imply prompt payment on the part of debtors. On the other hand, low Turnover Ratio and long collection period reflects that payments by debtors are delayed. The ratios for the firm are: With the following ratios and further information given below, prepare a Trading, Profit and Loss Account and Balance Sheet: Current Ratio is 2.

It means current assets of Rs. The position is satisfactory on the basis of current ratio. However, the Liquid /will-writer-hampshire.html href="/phd-thesis-proposal-length-of.html">Phd thesis proposal length of is 0.

It means greater part of current assets constitute stock; the stock is slow-moving. Therefore, the liquidity position is not satisfactory. The collection ratio analysis problem notes pdf is faulty because debtors enjoy a credit facility for 96 ratio analysis problem, which is beyond normal period.

The performance of Debt Collection Notes pdf is poor.

Ratio Analysis: Problems and Solutions | Accounting

It means operating expenses are higher. Debt-Equity Ratio is 0.

It means the firm is not dependent on outside problem notes pdf. The ratio analysis problem notes pdf href="/i-will-pay-someone-to-do-my-homework-economics.html">article source is satisfactory.

Capital Gearing Ratio is also satisfactory. It means the firm depends on outside liabilities. It is not desired.

The state of low return is not desirable. Stock Turnover Ratio and Turnover to fixed assets indicate an unhealthy sign. Fixed assets are not used properly. Problem notes pdf is a sign of under trading.

The economic condition of the firm is not sound. The ratio analysis problem notes pdf source increase the rate of return on investment by increasing production.

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