Accountancy

SOLUTION Current Assets include Cash and other assets which are expected to be converted into Cash within a short period (normally within one year).

SOLUTION Current Ratio explains the relationship between Current Assets and Current Liabilities of an enterprise. The formula for calculating the ratio is:                      Current Ratio = Current Assets / Current…

SOLUTION ‘Liquidity of Business’ refers to the firm's ability to meet its current obligations, i.e., short-term liabilities.

SOLUTION Ratio analysis becomes less effective due to price level changes.

SOLUTION (i) Helpful in judging the profitability of the business.(ii) Helpful in judging the liquidity of the business.

SOLUTION (i) To locate the weak spots of business which need more attention. (ii) To provide deeper analysis of the profitability and financial position of the business.

SOLUTION According to Myers, ratio analysis is a study of relationship among various items or group of items in financial statements.

SOLUTION Relationship between two figures expressed in arithmetical terms is called a ratio. A ratio is simply one number expressed in terms of another. It can be expressed in the…

SOLUTION  A common size statement of Profit & Loss is a statement in which the figure of revenue from operations is assumed to be equal to 100 and all other…