Case 1 Once upon a time, there was a small business owner named John who ran a successful furniture store. He had always been careful about managing his finances, and he had a good balance of debt and equity to support his business. However, one day, John received an offer to open a second location […]
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Once upon a time, there was a young entrepreneur named Kiara who had just started her own business. She was determined to make her business a success, but she also knew that she would need to be smart about managing her finances. One day, Kiara heard about the concept of debt equity ratio. She learned
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The debt-to-equity ratio is a financial ratio that measures the amount of a company’s debt relative to its equity. It is calculated by dividing the company’s total debt by its total equity. Formula Debt / Equity, where Debt – It covers all long term or non-current liabilities of the company Equity – It covers shareholders’
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
