Ratios are expressions of one number in relation to another, and are used to analyze financial statements. A ratio is calculated by dividing one figure by another. Ratios can be expressed as a quotient, percentage, or proportion. Current assets and current liabilities are used to calculate ratios like net working capital, quick assets, and absolute quick assets. Activity ratios measure efficiency and use figures like cost of goods sold and average inventory.

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2. Ratio is an expression of one number in relation to another. It
is one of the method of analysing financial statement. A ratio is
found by dividing one figure by another.
Ratio is an expression of one number in relation to another. It
is one of the method of analysing financial statement. A ratio is
found by dividing one figure by another.
1. Quotient obtained by dividing one value by the other
Presented 40 students out of 60 students. The ratio is
40/60=2/3= 0.67 Times
1. Quotient obtained by dividing one value by the other
Presented 40 students out of 60 students. The ratio is
40/60=2/3= 0.67 Times
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2. Quotient obtained by multiplied by hundred
Presented 40 students out of 60 students. The ratio is 40/60*100
=2/3= 66.67% Times
2. Quotient obtained by multiplied by hundred
Presented 40 students out of 60 students. The ratio is 40/60*100
=2/3= 66.67% Times
3.Ratio is also expressed as a proportion.
Presented 40 students out of 60 students. The ratio is 40:60 =4:6
=2:3
3.Ratio is also expressed as a proportion.
Presented 40 students out of 60 students. The ratio is 40:60 =4:6
=2:3

3. Current Assets: Cash+ Bank + Debtors + Bills Payable +
Inventory + Prepaid Expenses + Accrued Income + Loan &
Advance
Current Liabilities: Sundry Creditors + Bills Payables
+ Outstanding Expenses + Provision for Bad Debts
Quick Assets: Current Assets – Stock & Prepaid Expenses
Absolute Quick Assets: Cash + Bank

4. Debt: Loan From Bank + Financial Institutions+ Public Deposit
Equity: Equity Capital + Preference Capital + Reserves

5. Capital Employed= Owners
funds + Long Term Debt
Note: These are called Activity
Ratios or Efficiency Ratios
Net Working Capital = Current Assets – Current Liabilities

6. Note: These are called Activity
Ratios or Efficiency Ratios
Cost of Goods Sold = Sales-Gross Profit
Average Inventory = (Opening Stock + Closing Stock)/2

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