CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes

Accountancy
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Download the latest CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes in PDF format. These Class 12 Accountancy revision notes are carefully designed by expert teachers to align with the 2025-26 syllabus. These notes are great daily learning and last minute exam preparation and they simplify complex topics and highlight important definitions for Class 12 students.

Chapter-wise Revision Notes for Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios

To secure a higher rank, students should use these Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios notes for quick learning of important concepts. These exam-oriented summaries focus on difficult topics and high-weightage sections helpful in school tests and final examinations.

Part 2 Chapter 5 Accounting Ratios Revision Notes for Class 12 Accountancy

Accounting Ratios
 
Accounting Ratio : It is an arithmetical relationship between two accounting variables.

Ratio Analysis : It is a technique of analysis of financial statements to conduct a quantitative analysis of information in a company’s financial statements.
“Ratio analysis is a study of relationship among various financial factors in a business.”- Myers
 
Expression of ration: Ratios are expressed in following four ways:
· Pure Ratio Like 2:1. All liquidity and solvency ratios are expressed in pure form.
· Percentage e.g. 15%. All profitability ratios are presented in percentage form.
· Times Like 4 times. All turnover ratios and Interest Coverage Ratio are presented in this form.
· Fraction like 3/4.
 
Classification or Types of Ratios:
 
Ratios can be classified into following 4 categories:
1. Liquidity Rations
2. Solvency Rations
3. Activity Rations also known as turnover Ratios or Performance Ratios.
4. Profitability Rations
 
IMPORTANT POINT
 
Note: For Calculation of ratios Formula must be written as it carries marks. Liquidity Ratios: These measure short term solvency, i.e. the firm’s ability to pay its current dues. In Liquidity Rations the following two ratios are included.
 
1. Current Ratio also called Working Capital Ratio.
2. Liquid Ratio also called Quick Ratio or Acid Test Ratio.
1. Current Ratio : It shows the relationship of current assets with current liabilities
Current Ratio =
 
Current Assets
 
An asset shall be classified as current when it satisfies any of the following criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle:
(b) it is held primarily for the purpose of being traded:
(c) it is expected to be realized within twelve months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
 
The following items are include under Current Assets:
 
(a) Current investments
(b) Inventories
(c) Trade receivables (Debtors and Bills Receivables) after deducting any provision for
 
1. Debt Equity Ratio: It show relationship between Debts (Long term Liabilities or Non Current Liabilities) and Equity (Shareholders’ Funds).
Debt Equity Ratio =
Debts = Long-term borrowing + Long-term provisions
Equity/Shareholders’ Funds = Share Capital + Reserves and Surplus – Non – Trading Investments
 
OR
 
Equity/Shareholders’ Funds = Fixed Assets (Tangible and Intangible) + Non Current
Investment (Excluding Non Trading investment) +Long Terms Loans and Advances + Current
Assets – Current Liabilities – Long –term borrowings – Long – term Provision
 
1. Significance: It assesses the long term soundness of financial position of a business.
2. Ideal Ratio: 2:1 is considered as best but it should not be more than this.
2. Total Assets to Debt Ratio : It shows the relationship between Total Assets and Debts.
 
Total Assets To Debt Ratio =
 
Total Assets = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding Non Trading Investment) + Long Term Loans and Advances + Current Assets Debts = Long-term borrowing + Long-term provisions
 
Significance: It measures the safety margin available to the providers of long term loans.
 
Ideal Ratio: No ideal ratio but a high ratio indicates higher safety to lenders and low ratio represents risky position.
 
3. Proprietary Ratio: It shows the relationship between Proprietors’ Funds/shareholders’ Funds and Total Assets of the business.
Proprietary Ratio = Proprietors’ Funds = Share Capital + Reserves and Surplus-Non Trading Investment

OR
 
Equity/Proprietors’ Funds = Fixed Assets (Tangible and intangible) + Non Current
investments (Excluding Non Trading investment) + Long Terms Loans and Advances +
Current Assets – Current Liabilities – Long – term borrowings – Long term provisions.
Total Assets = Fixed Assets (Tangible and Intangible) + Non Current Investment (Excluding
Non trading Investment) +long Term Loans and Advances + Current Assets
 
1. Significance: It measures the proportion of total assets financed by the Proprietors of the business. It shows the safety margin available to the lenders of the business as they can ascertain the portion of the shareholders in the business.
 
2. Ideal Ratio: No ideal ratio but a high ratio indicates higher safety to lenders and law ratio represents risky position from lender’s point of view.
 
4.Interest Coverage Ratio : This ratio establishes relationship between the Net Profit before Interest & Tax and interest payable on long term debts (Fixed Interest Charges)
Interest Coverage Ratio =
 
1. Since interest is a charge on profit, net profit taken to calculate this ratio is before interest & tax.
2. Objective & Significance-Objective is to ascertain the amount of profit available to cover the interest charge. It determines ease with which a company can pay interest expense on outstanding debt.
3. Parties interested in this ratio are debenture holders and lenders of long term credit.
4. High Ratio is better for lenders as it indicates higher safety margin.


Please click on below link to download CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes

Part 1 Chapter 01 Accounting for Partnership Basic Concepts
CBSE Class 12 Accountancy Accounting For Partnership Firms Notes
CBSE Class 12 Accountancy Goodwill Nature And Valuation Notes
CBSE Class 12 Accountancy Partnership Fundamentals Notes
CBSE Class 12 Accountancy Partnership Guarantee Of Profits Notes
Part 1 Chapter 02 Reconstitution of a Partnership Firm Admission of a Partner
CBSE Class 12 Accountancy Accounting For Partnership Firms Admission Of A Partner Notes
CBSE Class 12 Accountancy Accounting For Partnership Firms Fundamentals Notes
CBSE Class 12 Accountancy Reconstitution Of Partnership Notes
Part 1 Chapter 03 Reconstitution of a Partnership Firm Retirement/Death of a Partner
CBSE Class 12 Accountancy Retirement Or Death Of A Partner Notes
Part 1 Chapter 04 Dissolution of Partnership Firm
CBSE Class 12 Accountancy Dissolution Of A Partnership Firm Notes
Part 2 Chapter 01 Accounting for Share Capital
CBSE Class 12 Accountancy Accounting For Companies Notes
CBSE Class 12 Accountancy Accounting For Share Capital Chapter Notes
CBSE Class 12 Accountancy Accounting For Share Capital Notes
CBSE Class 12 Accountancy Implementation Of Schedule VI Of Companies Act Notes
CBSE Class 12 Accountancy Partnership Accounting For Issue Of Share Capital Notes
Part 2 Chapter 02 Issue and Redemption of Debentures
CBSE Class 12 Accountancy Accounting For Debentures Notes
CBSE Class 12 Accountancy Redemption Of Debenture Notes
Part 2 Chapter 03 Financial Statements Of a Company
CBSE Class 12 Accountancy Financial Statement Of Companies Notes
Part 2 Chapter 04 Analysis of Financial Statements
CBSE Class 12 Accountancy Analysis Of Financial Statements Notes
CBSE Class 12 Accountancy Partnership Common Size And Comparative Statements Notes
Part 2 Chapter 05 Accounting Ratios
CBSE Class 12 Accountancy Accounting Ratios
CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes
CBSE Class 12 Accountancy Partnership Ratio Analysis Notes
Part 2 Chapter 06 Cash Flow Statement
CBSE Class 12 Accountancy Cash Flow Statement Notes Set A
CBSE Class 12 Accountancy Cash Flow Statement Notes Set B
CBSE Class 12 Accountancy Partnership Cash Flow Statement Notes
~ Class 12 Accountancy (Old Chapters)
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set A
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set B
CBSE Class 12 Accountancy Case Study Questions Accounting For Not For Profit OrganisationNotes Notes
CBSE Class 12 Accountancy Important Formulas

Important Practice Resources for Class 12 Accountancy

CBSE Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios Notes

Students can use these Revision Notes for Part 2 Chapter 5 Accounting Ratios to quickly understand all the main concepts. This study material has been prepared as per the latest CBSE syllabus for Class 12. Our teachers always suggest that Class 12 students read these notes regularly as they are focused on the most important topics that usually appear in school tests and final exams.

NCERT Based Part 2 Chapter 5 Accounting Ratios Summary

Our expert team has used the official NCERT book for Class 12 Accountancy to design these notes. These are the notes that definitely you for your current academic year. After reading the chapter summary, you should also refer to our NCERT solutions for Class 12. Always compare your understanding with our teacher prepared answers as they will help you build a very strong base in Accountancy.

Part 2 Chapter 5 Accounting Ratios Complete Revision and Practice

To prepare very well for y our exams, students should also solve the MCQ questions and practice worksheets provided on this page. These extra solved questions will help you to check if you have understood all the concepts of Part 2 Chapter 5 Accounting Ratios. All study material on studiestoday.com is free and updated according to the latest Accountancy exam patterns. Using these revision notes daily will help you feel more confident and get better marks in your exams.

Where can I download the latest PDF for CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes?

You can download the teacher prepared revision notes for CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes from StudiesToday.com. These notes are designed as per 2025-26 academic session to help Class 12 students get the best study material for Accountancy.

Are these Accountancy notes for Class 12 based on the 2026 board exam pattern?

Yes, our CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes include 50% competency-based questions with focus on core logic, keyword definitions, and the practical application of Accountancy principles which is important for getting more marks in 2026 CBSE exams.

Do these Class 12 notes cover all topic-wise concepts for Accountancy?

Yes, our CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes provide a detailed, topic wise breakdown of the chapter. Fundamental definitions, complex numerical formulas and all topics of CBSE syllabus in Class 12 is covered.

How can I use CBSE Class 12 Accountancy Partnership Ratio Analysis Chapter Notes for quick last-minute revision?

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