Chapter 16

Accounting Ratios

LEARNING OBJECTIVES

After studying this chapter, you would be able to understand

  1. Meaning of Ratio and Ratio Analysis

  2. Objective of Ratio Analysis

  3. Advantages and Uses of Ratio Analysis

  4. Limitations of Ratio Analysis

  5. Classification of Ratios

  6. Liquidity Ratios – Computations

  7. Solvency Ratios – Computations

  8. Profitability Ratios – Computations

  9. Activity Ratios – Computations

  10. Ratios

INTRODUCTION

Usually the accounting goal in preparing financial statements is to provide valuable information to its different types of users. They mainly concentrate on collecting financial data and preparing financial statements — Balance Sheet and Income Statement. These statements provide only certain figures for its components. In order ...

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