Doubts

SOLUTION Numerator to be used in Trade Receivables Turnover Ratio is Net Credit Revenue from Operations.

SOLUTION It indicates the speed with which the amount is collected from trade receivables. It is calculated as follows: Trade Receivable Turnover Ratio = Net Credit Revenue from Operations /…

SOLUTION It indicates the relationship between the cost of Revenue from Operations and average inventory. It shows how quickly the inventory is rotated into sales or the number of times…

SOLUTION Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

SOLUTION Activity ratio shows the rapidity with which assets of the business are being means utilised.

SOLUTION It measures the extent to which long-term loans are covered by assets which indicates the margin of safety available to providers of long-term loans. A higher total asset to…

SOLUTION It expresses the relationship between total assets and long-term loans. It iscalculated as under:Total Assets to Debt Ratio = Total Assets / Long term Debts.

SOLUTION It indicates the proportion of total assets financed by shareholder’s funds.

SOLUTION It captures relationship between equity and total assets. The following is the formula:Proprietary = Equity (Shareholder’s Funds) / Total Assets