CBSE Class 12 Accountancy Accounting Ratios Assignment

Read and download free pdf of CBSE Class 12 Accountancy Accounting Ratios Assignment. Get printable school Assignments for Class 12 Accountancy. Class 12 students should practise questions and answers given here for Part 2 Chapter 5 Accounting Ratios Accountancy in Class 12 which will help them to strengthen their understanding of all important topics. Students should also download free pdf of Printable Worksheets for Class 12 Accountancy prepared as per the latest books and syllabus issued by NCERT, CBSE, KVS and do problems daily to score better marks in tests and examinations

Assignment for Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios

Class 12 Accountancy students should refer to the following printable assignment in Pdf for Part 2 Chapter 5 Accounting Ratios in Class 12. This test paper with questions and answers for Class 12 Accountancy will be very useful for exams and help you to score good marks

Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy Assignment

Important Notes for Class 12 Accountancy Accounting Ratios

Accounting Ratios
Meaning :- 
The quantitative relation between two amounts showing the number of times one value contains or is contained within the other.
 
A ratio may be expressed in the following ways:

(1) 'Proportion' or Pure Ratio or Simple Ratio:
It is the division of one number with the other and expressing in the lowest form of divisibility. The numbers are related with a ':'
sign. For example, a simple ratio of Current Assets (say, ₹3,00,000 and Current Liabilities (say, ₹1,50,000) will be 3,00,000:1,50,000 i.e. in the lowest/simplest form 2:1 (Two is to one)
 
(2) Rate or So many times:
In this we find out that 'how many times' one number is, in comparison to another number.
For example, if we compare 10 and 5, so we may say: 10/5=2 i.e. 10 is 2 times 5.
 
(3) Percentage:
Example: Gross Profit= ₹2,00,000 and Sales=₹10,00,000 then, GP ratio=₹2,00,000/₹10,00,000 X 100= 20%
 
(4) Fraction:
Example: Gross Profit= ₹2,00,000 and Sales=₹12,00,000 then,
we may say Gross Profit is one-sixth of Sales.
Now, if we talk about firms, then there are two types of ratio analysis involved viz. Cross-sectional analysis (when the data/ratios of one firm is compared with other firms) and Timeseries or trend analysis (when the data/ratios of the same firm is compared over various time periods like ratios of 2017, 2018 and 2019 are compared).

Classification of Ratios:
1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover Ratios
4. Profitability or Income Ratios

Liquidity Ratios:
Liquidity refers to the ability of a firm to meet its current liabilities. They are also known as 'Short-term Solvency ratios'.
It includes 2 ratios:
A. Current Ratio or Working capital ratio
B. Quick Ratio or Liquid Ratio or Acid Test Ratio

Solvency Ratios:
These ratios reveal the long term solvency of the firm.
They include the following ratios:
A. Debt Equity ratio
B. Total Assets to Debt Ratio
C. Proprietary Ratio
D. Interest Coverage Ratio
 
Activity Ratios:
They are also known as 'Turnover Ratios' because they are calculated on the basis of 'Cost of Revenue from operations' or 'Revenue from operations'.
They include the following ratios:
A. Inventory Turnover Ratio or Stock Turnover Ratio
B. Debtors or Receivables Turnover Ratio
C. Creditors or Payables Turnover Ratio
D. Working Capital Turnover Ratio

Profitability Ratios or Income Ratios:
These ratios measure the Proportion of profitability with respect to various profit centres i.e. items that affect the profitability of the firm.
They include the following ratios:
A. Gross Profit ratio
B. Operating ratio
C. Operating Profit ratio
D. Net Profit ratio
E. Return on Investment or R.O.I    
 
Formulae:

I. Current ratio =  Current Assets/ Current Liabilities
 
The ideal ratio is 2:1. If it is more, it is considered as better. If the ratio is less than 2:1, then it indicates that there is a shortage of Working capital.
 
II. Quick Ratio= Liquid Assets/Current Liabilities
Liquid Assets=
Current Assets- Inventories- Prepaid Expenses and Advance Tax.
Or
= Current Investments + Trade Receivables + Cash and Cash Equivalents + Short term Loans and Advances
The ideal ratio is 1:1. If it is more, it is considered as better. If the ratio is less than 1:1, then it indicates that the short term financial position of the company is not good.
 
Note: Provision for Doubtful Debts is reduced from Trade Receivables while calculating Current and Quick ratio.
Sola6
 
Long term Debts include long term borrowings and long term provisions maturing after one year. For example, Debentures, Bank Loan,etc.
Shareholder's Fund = Share Capital + Reserves and Surplus OR
= Non-Current assets + Current Assets - Current liabilities - Non Current Liabilities
{Also, Current Assets - Current liabilities = Working Capital}
Share Capital = Equity + preference shares
The ideal Debt-Equity ratio is 2:1. If it is more than that, then the financial position of the firm is risky. Hence, the lower the ratio, the better it is for the long term lenders.
 
Sola7
It ascertains the soundness of the long term policies of the firm.
This ratio indicates how much of total assets have been financed by long-term debts. A higher ratio indicates that assets have been mainly financed by owners funds and less of long-term debts.
 
Sola8
Shareholder's Fund is also known as Proprietor's Fund
Total Assets= Non Current Assets + Current Assets
 
This ratio shows the proportion of total assets funded by owners or shareholders.
Higher the ratio, the better it is. It is usually expressed in percentage.
 
Sola9
It is expressed in 'TIMES'. It is also known as Debt Service Ratio.
The higher the ratio, the better it is. a high ratio provides a sense of security to the lender with respect to interest payments.
Net profit after tax means Net Profit after Interest and tax because tax is deducted only after deduction of Interest.
Hence, profit after tax means that the interest is already subtracted.
 
Sola10
Cost of revenue from operations is also known as Cost of Goods Sold.
It is calculated in 'TIMES'. The Inventory Turnover Ratio provides insight on how long cash is tied up in the cycle of being used to purchase raw materials or a finished product for sale through to
selling the product. The higher the ratio, the better it is.
Cost of revenue from operations=
Revenue from operations- Gross Profit
OR
Revenue from Operations + Gross Loss
OR
Opening Inventory + Purchases + Carriage + Wages + Other Direct Expenses - Closing Inventory
 
Sola11
 
It is calculated in 'TIMES'. It measures how many times a business can turn its accounts receivable into cash during a period. In other words, the accounts receivable turnover ratio measures how many times a business can collect its average accounts receivable during the year. The higher the ratio, the better it is. If the amount of credit Revenue from operations isn't given in the question and it can't be found out using the values in the question, then the ratio may be calculated on the basis of
Total Revenue from operations.
Average Trade
Sola12
It is calculated in 'TIMES'. If the amount if credit purchases isn't given in the question and it can't be found out using the values in the question, then the ratio may be calculated on the basis of Total Purchases. It shows a company’s ability to pay off its accounts payable by comparing net credit purchases to the average accounts payable during a period. In other words, the accounts payable turnover ratio is how many times a company can pay off its average accounts payable balance during the course of a year.
 
 
 Sola13
 
It is calculated in 'Times'. Working capital is current assets minus current liabilities. A high turnover ratio indicates that management is being extremely efficient in using a firm's shortterm assets and liabilities to support sales. Conversely, a low ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales, which could eventually lead to an excessive amount of bad debts and obsolete inventory write-offs.
 
Sola14
A higher ratio is considered better. The ratio can be used to test the business condition by comparing it with past years’ ratio and with the ratio of other companies in the industry. A consistent improvement in gross profit ratio over the past years is the indication of continuous improvement .
 
 
Gross Profit = Revenue from Operations - Cost of Revenue from Operations
Cost of Revenue from Operations = Opening Inventory + Net Purchases + Carriage + Wages + Other Direct Expenses - Closing Inventory
Note: Spare parts and Loose Tools are not included in Inventory
 
 
Sola15
Operating Expenses = Employee Benefit expenses + 
Depreciation and Amortization expenses+ Other expenses ( like Office and Administration expenses + Selling and distribution expenses+ Discount + Bad-debts+ Interest on short-term loans)
{In short, Operating expenses are those expenses which are incurred in the day to day operations of the company}
Operating Income = Trading commission received, Cash Discount Received
The operating ratio is used to measure the operational efficiency of the management. It shows whether or not the cost component in the sales figure is within the normal range. A low operating ratio means a high net profit ratio (i.e., more operating profit) and vice versa.
 
Sola19
 
Operating Profit = Gross profit - operating expenses + Operating Incomes
OR
Operating Profit = Net profit (before tax) + Non Operating
expenses (like Loss on sale of fixed assets, loss from fire, income tax, finance charges relating to interest on long term debts, interest on debentures,etc.) - Non Operating Incomes (like Profit on sale of fixed assets, Interest and dividend received on investments, etc.)
A company with higher operating margin ratio is financially sound. It can easily pay its fixed costs and interest on the debt. 
A company with good operating ratio can successfully survive during an economic crisis. Only a company with higher operating margin ratio can successfully compete with the competitors by lowering the price of products to such level that competitors will not be able to survive.
Note: Operating Ratio + Operating Profit Ratio = 100%
 
Sola16
 
Net Profit = Gross Profit - Indirect Expenses and losses + Other Incomes - Tax
Indirect Expenses and losses = Office expenses + Selling expenses+ Interest on Long term Borrowings + Accidental Losses + Other indirect expenses
 
As such, it is one of the best measures of the overall results of a firm. The measure is commonly reported to judge performance over time. It is also used to compare the results of a business with its competitors.
 
Sola17
 
It is also known as 'Rate of Return' or 'Yield on Capital' or 'Return on Capital Employed'.
Return on investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments.
 
 Sola18
Non Current Assets = Tangible Assets + Intangible Assets + Non Current Investments + Long term Loans and Advances


ACCOUNTING RATIOS

1. Calculate the liquidity ratios and comment on the short term financial position of the company from the following information: Rs. Closing Inventory 2,00,000

Trade Receivables

Less: Provision for Doubtful Debts      1,00,000

Cash                                                  30,000

Marketable Securities                          20,000

Income Tax Paid in Advance                 10,000

Share Issue Expenses                          15,000

Liability for current taxation                  20,000

Liability for Future Taxation                   30,000

Trade Payables                                     34,000

Outstanding Salaries                              5,000

Bank Overdraft                                    25,000

Dividends Payable                                36,000

2. Assuming that the current ratio is 2:1, state giving reasons, which of the following transactions would (i) improve, (ii) reduce, or (iii) not alter, the current ratio:

(a) Cash collected from trade receivables

(b) B/R received from trade receivables

(c) B/R endorsed to trade payables

(d) B/R dishonoured

(e) Sale of inventories at par for cash

(f) Sale of inventories at profit for cash

(g) Sale of inventories at profit on credit

(h) Sale of a fixed asset on a credit of 2 months.

(i) Sale of a fixed asset on long term deferred payment basis

(j) Issue of new shares against purchase of fixed asset

3. A firm had current assets of Rs.2,00,000. Ot then paid a current liability of Rs.40,000. After this payment the current ratio was 2:1. Determine:

(a) The size of current liabilities and working capital after the payment

(b) Also determine the size of these two items before the payment was made.

4. The current assets pf Monarch Company are Rs. 29,745 and the current ratio is 1.5. The inventories stood at Rs.8,827. Calculate the liquid ratio and comment on the liquidity position of the company.

5. From the given information, calculate the inventory turnover ratio:

Revenue from operations Rs.2,00,000; GP : 25% on cost; Opening inventory was 1/3rd of the value of Closing Inventory. Closing Inventory was 30% of Revenue from Operations.

6. Calculate the amount of Opening and Closing Trade receivables from the following:

Trade Receivables Turnover Ratio   : 6 Times
Cost Of Revenue from Operations  : Rs.6,00,000
Gross Profit Ratio                         : 20% on cost
Cash Revenue from Operations being 25% of Total Revenue from Operations

Opening Trade Receivables were 1/4th of Closing Trade Receivables.
 
7. From the following figures pertaining to two companies A Ltd. and B Ltd., belonging to
Plastic Industry. Calculate the Gross Profit Ratio of the two companies. Which company is doing
better?
Particulars A Ltd. B Ltd.
Net Profit after Interest 75,000 1,10,000
Indirect Expenses 10,000 15,000
Interest paid on Debentures 15,000 25,000
Revenue from Operations(Gross) 3,30,000 3,80,000
Revenue from Operations Return 10,000 20,000
 
8. Following information is available for the year ending 31st March, 2008. Calculate Gross
Profit Ratio:
                                                                                       Rs.
Cash Revenue from Operations                                      2,00,000
Purchases: Cash                                                           1,50,000
Credit                                                                          4,50,000
Carriage Inwards                                                               6,000
Salaries                                                                          75,000
Decrease in Inventory                                                      80,000
Return Outwards                                                             20,000
Wages
Ratio of Cash Revenue from Operations and Credit
revenue from Operations                                                 50,000
 
9. Opening Inventory Rs.60,000; Closing Inventory Rs.1,00,000; Inventory Turnover Ratio 8
Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
 
10. Calculate (i) Operating Profit Ratio; (ii) Net Profit Ratio, from the following:
 
Particulars                                         Rs.
Revenue from Operations               4,10,000
Revenue from Operations Return        10,000
Gross Profi                                  t 1,50,000
Office Expenses                                15,000
Selling Expenses                               26,000
Interest On Debentures                     10,000
Loss by fire                                      24,000
Income from Investments                   5,000
 
11. Gross Profit Ratio of a Company was 20%. Its credit revenue from operations were Rs18,00,000 and its cash revenue from operations were 10% of the total revenue from operations. If the indirect expenses of the company were Rs.50,000, calculate its net profit ratio.


Please click the below link to access CBSE Class 12 Accountancy Accounting Ratios Assignment

Part 1 Chapter 01 Accounting for Not for Profit Organisation
CBSE Class 12 Accountancy Accounting for Not for Profit Organisation Assignment
Part 1 Chapter 02 Accounting for Partnership : Basic Concepts
CBSE Class 12 Accountancy Accounting For Partnership Firms
CBSE Class 12 Accountancy Accounting for partnership firms Fundamentals Assignment
Part 1 Chapter 03 Reconstitution of a Partnership Firm Admission of a Partner
CBSE Class 12 Accountancy Admission of a Partner Assignment
CBSE Class 12 Accountancy Reconstitution Of Partnership Assignment Part A
CBSE Class 12 Accountancy Reconstitution Of Partnership Assignment Part B
Part 1 Chapter 04 Reconstitution of a Partnership Firm Retirement/Death of a Partner
CBSE Class 12 Accountancy Retirement and Death of Partner Questions
Part 1 Chapter 05 Dissolution of Partnership Firm
CBSE Class 12 Accountancy Dissolution of Partnership Firm Assignment
Part 2 Chapter 01 Accounting for Share Capital
CBSE Class 12 Accountancy Accounting For Share Capital and Debenture Assignment
CBSE Class 12 Accountancy Company Accounts Share Capital Assignment
CBSE Class 12 Accountancy Forfeiture and Reissue of Shares Assignment
CBSE Class 12 Accountancy Issue of Shares Assignment
Part 2 Chapter 02 Issue and Redemption of Debentures
CBSE Class 12 Accountancy Accounting For Debentures Assignment
CBSE Class 12 Accountancy Issue And Redemption Of Debenture Assignment
Part 2 Chapter 03 Financial Statements of a Company
CBSE Class 12 Accountancy Financial Statements of a Company Assignment
Part 2 Chapter 04 Analysis of Financial Statements
CBSE Class 12 Accountancy Analysis of Financial Statements Assignment
CBSE Class 12 Accountancy Financial Statement Analysis Assignment
Part 2 Chapter 05 Accounting Ratios
CBSE Class 12 Accountancy Accounting Ratios Assignment
CBSE Class 12 Accountancy Ratio analysis Assignment
Part 2 Chapter 06 Cash Flow Statement
CBSE Class 12 Accountancy Cash Flow Statement Set A
CBSE Class 12 Accountancy Cash Flow Statement Set B
z More Study Material
CBSE Class 12 Accountancy Revision Assignment Set A
CBSE Class 12 Accountancy Revision Assignment Set B
CBSE Class 12 Accountancy Revision Assignment Set C

More Study Material

Tags
CBSE Assignments
CBSE Class 12 Accountancy Assignments
CBSE Class 12 Accountancy pdf test papers
Class 12 Accountancy Assignment pdf
CBSE Class 12 Accountancy
Accountancy Class 12 Assignments
CBSE Class 12 Accountancy Chapter Assignments
Assignments for Class 12 Accountancy

CBSE Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios Assignment

We hope you liked the above assignment for Part 2 Chapter 5 Accounting Ratios which has been designed as per the latest syllabus for Class 12 Accountancy released by CBSE. Students of Class 12 should download and practice the above Assignments for Class 12 Accountancy regularly. We have provided all types of questions like MCQs, short answer questions, objective questions and long answer questions in the Class 12 Accountancy practice sheet in Pdf. All questions have been designed for Accountancy by looking into the pattern of problems asked in previous year examinations. 

Assignment for Accountancy CBSE Class 12 Part 2 Chapter 5 Accounting Ratios

Our team of expert teachers have referred to NCERT book for Class 12 Accountancy to design the Accountancy Class 12 Assignments. If you practice at least one test paper daily, you will get higher marks in Class 12 exams this year. Daily practice of Accountancy course notes and related study material will help you to clear all your doubts and have stronger understanding of all concepts. You can download all Revision notes for Class 12 Accountancy also from www.studiestoday.com absolutely free of cost.

Part 2 Chapter 5 Accounting Ratios Assignment Accountancy CBSE Class 12

All questions and their answers for the assignment given above for Class 12 Accountancy have been developed as per the latest curriculum and books issued for the current academic year. The students of Class 12 can rest assured that the best teachers have designed the questions of Accountancy so that you are able to revise the entire syllabus if you do the assignments. Lot of MCQ questions for Class 12 Accountancy have also been given in the worksheets and assignments for regular use. All study material for Class 12 Accountancy students have been given on studiestoday.

Part 2 Chapter 5 Accounting Ratios Assignment CBSE Class 12 Accountancy

Regular assignment practice helps to get a more comprehensive understanding of Part 2 Chapter 5 Accounting Ratios concepts. Assignments play a crucial role in understanding Part 2 Chapter 5 Accounting Ratios in CBSE Class 12. Students can download all the assignments of the same chapter in Class 12 Accountancy in Pdf format. You can print them or read them online on your computer or mobile.

CBSE Accountancy Class 12 Part 2 Chapter 5 Accounting Ratios Assignment

CBSE Class 12 Accountancy latest books have been used for coming up with the latest questions and solutions for the above assignment. If you have revised all concepts relating to Part 2 Chapter 5 Accounting Ratios then you should attempt all questions given in the test sheets above. We have also provided lot of Worksheets for Class 12 Accountancy which you can use to further make your self stronger in Accountancy

Where can I download in PDF assignments for CBSE Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios

You can download free Pdf assignments for CBSE Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios from StudiesToday.com

The assignments for Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy for have been made based on which syllabus

The Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy Assignments have been designed based on latest CBSE syllabus for Class 12 Accountancy issued for the current academic year

Can I download and print these printable assignments for Accountancy Part 2 Chapter 5 Accounting Ratios Class 12

Yes, These printable assignments for Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy are free to download and print

How many topics are covered in Part 2 Chapter 5 Accounting Ratios Accountancy assignments for Class 12

All topics given in Part 2 Chapter 5 Accounting Ratios Accountancy Class 12 Book for the current academic year have been covered in the given assignment

Is there any charge for this assignment for Part 2 Chapter 5 Accounting Ratios Accountancy Class 12

No, all Printable Assignments for Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy have been given for free and can be downloaded in Pdf format

How can I download the printable test assignments for Part 2 Chapter 5 Accounting Ratios Accountancy Class 12

Just click on the View or Download button below, then another window with the Pdf will be visible, just click on the Pdf icon to download the free assignments for Part 2 Chapter 5 Accounting Ratios Class 12 Accountancy

Are these assignments available for all chapters in Class 12 Accountancy

Yes, apart from Accountancy you can download free assignments for all subjects in Class 12

Can I download solved assignments for Part 2 Chapter 5 Accounting Ratios CBSE Class 12 Accountancy

Our team of expert teachers at studiestoday.com have provided all answers for the practice questions which have been given in Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios assignments