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  • q1 What Is Ratio Analysis

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    Burhan Kirmani
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    Ratio analysis involves calculating and comparing various financial ratios to analyze a company's liquidity, solvency, activity, and profitability. There are different types of ratios including liquidity, solvency, and activity ratios. Key ratios discussed include the current ratio, which compares current assets to current liabilities; the debt to equity ratio, which compares long-term debt to shareholders' equity; and the gross and net profit ratios, which relate profits to sales. Ideal current and debt to equity ratios are both considered to be 2:1.

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    q1 What is Ratio Analysis

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    Ratio analysis involves calculating and comparing various financial ratios to analyze a company's liquidity, solvency, activity, and profitability. There are different types of ratios including liquidity, solvency, and activity ratios. Key ratios discussed include the current ratio, which compares current assets to current liabilities; the debt to equity ratio, which compares long-term debt to shareholders' equity; and the gross and net profit ratios, which relate profits to sales. Ideal current and debt to equity ratios are both considered to be 2:1.

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    3 views1 page

    q1 What Is Ratio Analysis

    Uploaded by

    Burhan Kirmani
    Ratio analysis involves calculating and comparing various financial ratios to analyze a company's liquidity, solvency, activity, and profitability. There are different types of ratios including liquidity, solvency, and activity ratios. Key ratios discussed include the current ratio, which compares current assets to current liabilities; the debt to equity ratio, which compares long-term debt to shareholders' equity; and the gross and net profit ratios, which relate profits to sales. Ideal current and debt to equity ratios are both considered to be 2:1.

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    © All Rights Reserved
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    Q1 WHAT IS RATIO ANALYSIS?

    Analysis of financial statements with the help of ratio is called ratio


    analysis.
    Q2 NAME THE DIFFERENT TYPES OF RATIO.
    LIQUIDITY RATIO, SOLVENCY RATIO, ACTIVITY RATIO,
    SOLVENCY RATIO.
    Q3 WHAT IS CURRENT RATIO?
    It is relationship of current assets to current liabilities.
    Q4 WHAT IS LIQUIDITY RATIO?
    Ratio used to measure short term solvency of the firm.
    Q5 WHAT IS DEBT EQUITY RATIO?
    Relationship between Debt (long term) debts and Equity (shareholders
    fund)
    Q6 WHAT IS AN IDEAL CURRENT RATIO?
    2:1
    Q7 WHAT IS AN IDEAL DEBT EQUITY RATIO?
    2:1
    Q8 WHAT IS NET WORKING CAPITAL?
    CURRENT ASSETS - CURRENT LIABILITIES
    Q9 WHAT IS GROSS PROFIT RATIO?
    It measures the relationship of gross profit to net sales.
    Q10 WHAT IS NET PROFIT RATIO?
    It shows the percentage of net profit earning on the sales.

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