MEANING Solvency ratios are financial ratios that measure a company’s ability to meet its long-term financial obligations. These ratios are used to evaluate a company’s financial stability and its ability to survive over the long term. Suppose I take a loan of Rs 1 crores from bank to purchase a house. From that money, I […]
MEANING AND FORMULA It is also known as liquid ratio or acid test ratio it is a measure of a company’s short-term liquidity. The Formula for calculating quick ratio is Quick Assets / Current Liabilities Quick Assets = Current Assets – Inventory – Prepaid Expenses For meaning of current assets and current liabilities please refer
Meaning Current ratio is a financial ratio that measures a company’s ability to pay its short-term debts and obligations. It is calculated by dividing the company’s current assets by its current liabilities Formula .Current Assets / Current Liabilities Current ratio is expressed as a pure ratio. Example 2:1 or 5:2, etc. What are Current Assets
There are many different types of accounting ratios, including: What are Short term funds and Long term funds Before discussing different types of ratios, first we need to understand the difference between short term funds and long-term funds. Suppose you take a big amount housing loan from bank and purchase a house. Does having a
Types or Classification of Accounting Ratios Read More »
What are Ratios A ratio is a mathematical expression that represents the relationship between two quantities or values. It is typically expressed as a fraction, with the numerator representing the first quantity and the denominator representing the second quantity What are Accounting Ratios Accounting ratios are statistical measures that are used to evaluate the financial
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Liquidity Ratios S No Ratio Name Formula 1 Current Ratio Current Assets / Current Liabilities Note : Stores and spares and Loose tools are to be excluded from inventoriesNote : Prov for bad Debts will be deducted from Sundry Debtors 2 Quick Ratio Quick Assets / Current Liabilities where Quick Assets Current Assets – Inventories
There can be different situations for accounting for Goodwill : Below we will discuss accounting entries for each of the above cases. Where the goodwill is paid privately Normally , first the new partner will pay Goodwill brought in by him to the firm and then firm will pay each old partners share to them.
Accounting for goodwill on admission of a new partner. Read More »
Sacrificing Ratio New profit Sharing Ratio It is the ratio in which old partners give their share to new partner/s It is the share in which all the partners (including new partner) share profits and losses in the future. It is related only to the old partners. it pertains to all the partners (including new
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Suppose A, B and C are partners in a firm sharing profits in the ratio of 3:2:1. D is admitted to the partnership and the profit sharing ratio in future will be 1 : 1 : 1 : 1. In this case 3:2:1 is called the old ratio and 1 : 1 : 1 :
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Admission of a partner in a partnership firm refers to the process of adding a new member to the partnership. When a new partner is admitted to the partnership, they become jointly and severally liable for the partnership’s debts and obligations. This means that each individual partner is responsible for the entire amount of the
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