ratio

The expense ratio denotes that percentage of the mutual fund's total net assets/corpus that goes towards meeting its expenses. These expenses are recurring in nature and must be differentiated from one-time expenses like loads (on entry and exit). The fund's recurring expenses that are broadly...

• On the basis of current ratio we can make the following statements: The optimum current ratio is 2:1 Telco is closer to this figure. This is an indication that Telco is not able to maintain a balance between its current assets and current liabilities. In the case of Daewoo the amount of...

A project report on ratio analysis of the company

The importance of Ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inference regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: 1. Liquidity Portion...

PROFITABILITY RATIOS : As a result of improvements in the working results, there has been improvement in several profitability ratios during 2003-04 as indicated. The Bank has declared an interim dividend of 10% during November 2003. Taking into consideration, the overall profitability...

It measures the debt servicing capacity of the firm completely as it considers both interest and principal repayment obligations. For both ratios, the higher the better is the capacity and better the coverage to the providers of debt capital.

It is a modified version of debt- equity ratio. The numerator includes long-term debt and preference share capital while the denominator includes equity share capital and reserves and surplus less: accumulated losses and fictitious assets. Significance: Gearing refers to the relationship...

It comments on the long-term capital structure of the company. Debt here does not include current liabilities. Shareholders’ funds include all share capital (equity and preference), reserves and surplus less: accumulated losses and fictitious assets. Another alternative is to take...

It shows with the speed with which the payments are made to the suppliers for purchase made from them It is a relationship between net credit purchase and average creditors.

It comments on the efficiency of credit management or collection from debtors. If credit sales are not known, use the net sales. Significance: 1. It indicates the rate at which debtors are converted to cash. 2. Helps in formulating the credit policy by indicating whether...

It indicates the frequency of sales or inventory replacement. If COGS is not known, use the net sales. If average inventory cannot be calculated, use only closing inventory. If the break up of inventory is given (ie Raw materials, WIP, finished goods) use only the finished goods in the...

Proprietor’s funds (also called net worth) include all share capital (equity and preference), reserves and surplus less: accumulated losses and fictitious assets. Total assets include all fixed assets, investments and current assets. Significance: 1. This ratio is a measure of long...

Quick assets are those current assets that can be converted into cash notice without much difficulty or loss in value. Quick assets include all current assets except inventories and prepaid expenses. Quick liabilities are those current liabilities that are fluctuating and will fall due for...

Classification from the view point of users Ratios may also be classified from the view point of users of accounting information. Thus, we can have the following groups of ratios. 1. From shareholders’ point of view: There are certain ratios which serve the purposes of shareholders...

NATURE OF’ RATIO ANALYSIS Though ratio analysis is ‘all the rage’ among the users of accounting information, it is better to understand the nature of ratios so that they can be employed judiciously under appropriate conditions.  The relation between two or more financial data brought out...

The key question in ratio analysis isn't only to get the right answer: for example, to be able to say that a business's profit is 10% of turnover. It means to say that profit is 10% of turnover. We can use ratio analysis to try to tell us whether the business 1. is profitable 2. has...

DIFFERENT MODES OF EXPRESSING AN ACCOUNTING RATIO Ratio may be expressed In different ways. They are as follows: a) Simple or Pure Ratios, b) Percentages, c) Rate. a) Simple or Pure Ratios Simple or pure ratio is merely a quotient arrived by simple division of one number by another...

During the later half of the 19th century. The bankers have used accounting ratios for analyzing a prospective debtor’s credit standing. But, their analysis was very much restricted to the study of current ratios alone. It was in 1919; Alexander Wall came out with his strong criticism of such...

INTRODUCTION TO RATIO ANALYSIS Ratio analysis is the method or process by which the relationship of item or groups of items in the financial statements are computed, determined and presented. Ratio analysis is an attempt to derive quantitative measures or guides concerning the financial...

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