Free Download of Class 12 Solutions for Accounting Ratios Available
FAQs on Class 12 DK Goel Solutions Volume 2 Chapter 5 - Accounting Ratios
1. What are the Benefits of Studying Chapter 5 of Class 12 Accountancy?
Students of Commerce can be benefitted in many ways after finishing the chapter. Chapter 5 primarily focuses on techniques of accounting ratios for analyzing the data provided at financial statements for evaluating profitability, solvency and efficiency of a particular agency. After studying this chapter, students will be able to elucidate on the meaning, objective, advantages and limitations of accounting ratios. Also, students will be able to identify the various types of commonly used ratios.
2. How to Avail DK Goel Accountancy Class 12 Solutions Accountancy Ratios?
Students who are actively looking for DK Goel Solutions Class 12 Chapter 5 Accounting Ratios can easily avail the solutions from online tutoring sites like Vedantu. Also, to make the study more interesting, Vedantu has come up with DK Goel Accountancy Class 12 Solutions Chapter 5 in PDF format.
The PDF helps students to get a clear understanding of the chapter. The proper presentation of every detail, including the techniques applied to the solutions along with the justification provided with the answers, make the chapter easier to grasp. To get access to the PDF, students need to download it or simply register with Vedantu.
3. What are the Terms Introduced in Chapter 5 Accountancy Class 12?
Chapter 5 of Class 12 Accountancy mostly deals with the accounting ratios and various attributes associated with it. The chapter gives detailed information on ratio analysis, the objective of ratio analysis, advantages of ratio analysis, limitations of ratio analysis and types of ratios.
Students will be able to learn new terms and apply them in the examinations as the chapter introduces the same. There are 14 new terms incorporating ratio analysis, solvency analysis, liquidity analysis, profitability analysis, quick assets, return on net worth, average collection period, trade receivables, efficiency ratios, activity ratios, dividend payout, turnover ratios, shareholder’s funds (Equity) and return on investment (ROI).
4. What does the term ‘Window Dressing’ mean?
Window Dressing as the name suggests stands for a situation when someone is trying to cover up the real situation, in this case, a business house. Whenever any business house tries to hide their poor financial condition by wrongly altering the annual reports and financial statements, it is said that they are resorting to Window Dressing. For example, a company’s current assets are Rs 3,00,000 and Liabilities are Rs 2,00,000. So the current ratio is 3:2. Now, if it makes a credit purchase of Rs 50,000 both assets and liabilities will increase by 50,000 and the current ratio will be reduced accordingly. The company may choose not to show these kinds of purchases, thus indulging in Window Dressing.
5. What are solvency ratios and what are they used for?
Solvency ratios are used to assess or predict the long term financial health of a company. It is used to determine whether or not the company will be able to pay off its long term debts. It can hint about an upcoming loss and even potential insolvency soon. Business Analysts take note of the red flags shown by solvency ratios quite seriously, especially when the stakes of investment are high. Analyzing solvency ratios like the Debt to Assets Ratio or Equity Ratio can help the business owner or the internal top management to chalk out things for the future in a better and sustainable way.
