Law of Success

MODULE - 6A Analysis of fiscal Statements news report Ratios II Notes 29 ACCOUNTING RATIOS II You outwit followt in the previous lesson that story symmetrys can be single out into five major groups videlicet liquidity ratios, action utensil ratios, solvency ratios, gainfulness ratios and leverage ratio. You have already learnt the miserlying, computations and significance of liquidity and drill ratios. In this lesson, you will learn about the several(a) solvency ratios, favourableness ratios and leverage ratio and their significance. OBJECTIVES after(prenominal) 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 southward; describe the limitations of accounting ratios. 29.1 SOLVENCY RATIOS The coast solvency refers to the ability of a bloodline enterprise to come across its yearn edge obligations. The enormous- line indebtedness of a home is towards unsecured bond holders, financial institutions providing medium and long term loans and other creditors sell goods on credit. These ratios indicate unfluctuatings ability to meet the fixed interest and its be and quittance schedules associated with its long term borrowings. The following ratios serve the figure of ascertain the solvency of the business firm.

Debt rectitude ratio Proprietary ratio 42 ACCOUNTANCY Accounting Ratios II Debt- honor ratio It is withal otherwise known as away to internal equity ratio. It is calculated to know the relative claims of outsiders and the owners against the firms assets. This ratio establishes the relationship between the outsiders financial resource and the sh areholders fund. Thus, Outsiders coin parcel of land holders funds The two canonic components of the ratio are outsiders funds and considerholders funds. The outsiders funds include each debts/liabilities to outsiders i.e. debentures, long term loans from financial institutions, etc. Shareholders funds mean preference share capital,...If you requirement to get a copious essay, order it on our website: Ordercustompaper.com

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