Ratio Analysis

Debt Equity Ratio

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. A Story to understand meaning of Debt Equity Ratio Once upon a time, there was a young girl named Alice who loved to …

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Solvency Ratios

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 …

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QUICK RATIO

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 …

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Current Ratio

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 …

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What are accounting ratios

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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Key Ratios

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 …

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