what is the meaning of ratio? Types of ratios?
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Answer / h.r. sreepada bhagi
Ratio is the Mathmetical(Arithmetical) expression of
relationship between two numbers of the same kind. Ratio can
be used in different fields. From Accounting angle ratios
are very significant tools in measuring various performance
parameters and other key accounting figures. Various ratios
ratios are used to compare similar figures for different
fiscal periods for the same company, with the industry, with
other companies in the same/related field or industry in
general.
Different ratios are expressed differently like A:B, %, No.
of times, etc.
For example in Financial Ratios such as Current Ratio,
Debt-Equity Ratio, Capital Gearing Ratio, P/E Ratio, P/B
Ratio, Stock Turn over Ratio, Gross Profit Ratio & many more
are very relevant & significant in measuring the performance
& position of a company's strength & future prospects.
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Trial balance as on 31st March, 2014 Particulars Debit Pula Particulars Credit Pula Wages 14 100 Dividends received 4 300 Salaries 13 000 Bank overdraft 41 000 Opening Stock 40 000 Returns 1 000 Machinery 49 000 Creditors 14 200 Investments 30 700 Sales 258 500 Drawings 23 000 Capital 30 000 Purchases 130 000 Returns 2 000 Debtors 18 000 Advertising 13 400 Interest 4 800 Cash 11 000 349 000 ======= 349 000 ======== Additional information: 1. Closing stock is valued at P53 000. 2. Wages include P350 being advance against wages. 3. Wages include P1 000 paid for erection of machinery. 4. A purchase of stationery for P430 has been inadvertently included in the Purchases account. 5. A sale of investments with a book value of P2 600 for P2 500 has been included in the Sales Account. 6. Salaries include P150 per month paid to the proprietor’s domestic servant. 7. Machinery is to be depreciated by 10 per cent. Required: a. The revenue statement (Trading and Profit and Loss Account) for the year ended 31st March 2014 and b. Statement of financial position (Balance Sheet) as on 31st March, 2014.
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