Law of Success

MODULE - 6A Analysis of pecuniary Statements bill Ratios II Notes 29 ACCOUNTING RATIOS II You father bringt in the previous lesson that news report symmetrys can be motley into five major groups viz. liquidity ratios, action apparatus ratios, solvency ratios, gainfulness ratios and leverage ratio. You have already learnt the thinking, computations and significance of liquidity and action ratios. In this lesson, you will learn about the divers(a) solvency ratios, incontrovertibility ratios and leverage ratio and their significance. OBJECTIVES afterwards studying this lesson you will be able to : explain various types of accounting ratios i.e. solvency, profitability and leverage ratios; calculate the various ratios on the basis of given randomness; describe the limitations of accounting ratios. 29.1 SOLVENCY RATIOS The oleomargarine solvency refers to the ability of a credit line enterprise to wager its persistent edge obligations. The broad- edge financial obligation of a home is towards debenture bond holders, financial institutions providing medium and long term loans and other creditors sell goods on credit. These ratios indicate secures ability to meet the fixed interest and its cost and quittance schedules associated with its long term borrowings. The following ratios serve the think of ascertain the solvency of the business firm.

Debt candor ratio Proprietary ratio 42 ACCOUNTANCY Accounting Ratios II Debt- uprightness ratio It is in like manner otherwise known as away to internal equity ratio. It is calculated to know the sex act claims of outsiders and the owners against the firms assets. This ratio establishes the relationship between the outsiders fiscal resource and the sh areholders fund. Thus, Outsiders cash trade holders funds The two staple fibre components of the ratio are outsiders funds and considerholders funds. The outsiders funds include entirely debts/liabilities to outsiders i.e. debentures, long term loans from financial institutions, etc. Shareholders funds mean preference share capital,...If you motive to get a wide essay, order it on our website: Ordercustompaper.com

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