## Class 12 Accountancy NCERT Solutions Chapter 5 - Accounting Ratios

## FAQs on NCERT Solutions for Class 12 Accountancy Chapter 5 - Accounting Ratios

1. What are the liquidity ratios?

The ratios which help to determine the company’s ability to pay back the current dues, are known as liquidity ratios. They calculate the short-term solvency of any business that is a simple conversation of assets into the delay. The time duration and loss are considered simultaneously during liquidity ratio calculation.

2. What do you mean by the Debt equity ratio?

The ratio declaring the relationship between the owner's fund and borrower’s fund, is known as Debt equity ratio. A lower ratio of it signifies the company's capability of meeting the long-term obligations. Lower the ratio, the higher the security for lenders.

3. What is the importance of the current ratio?

The importance of the current ratio is observed in the following conditions. Access of current assets in comparison to current liabilities helps to determine the security to creditors and the essence of safety. The current ratio ensures to easily decide the company’s ability to meet its current liabilities perfectly on time.

4. Is Vedantu a reliable source for board studies?

The answer is undoubtedly yes. However, you can try on your own and can find even much more reliability, accuracy, question series, detailed explanations, even more than your expectations.

5. What are the types of Accounting ratios?

Accounting ratios give quick ways to find out a business’s financial condition. Ratios are used more frequently for business analysis. Your finances can be analyzed using ratios. The most common types of accounting ratios are:

Liquidity ratios

Profitability ratios

Leverage ratios

Turnover ratios

Market value ratios

It may not be possible to analyze all the ratios at the same time. It is important to pick a few that are important for your business’s operations.

6. Why are accounting ratios important?

The relationship between the different items available in the financial statement is given by accounting ratios. Therefore, they are very useful for internal management, prospective investors, creditors, and outsiders. Ratios are also useful for measuring the liquidity, solvency, profitability, and management efficiency of a company. Accounting ratios play an important role in increasing the efficiency of the management, reducing the expenditure arid and for increasing the rate of profit, etc.

7. What are the four objectives of ‘Analysis of Financial statements’.

The four objectives are:

To assess the current profit and operational efficiency of a company as a whole and individual departments to judge the financial condition of the company.

To assess the financial condition of the company.

To know the reasons for the change in the profitability and financial position of the company.

To judge the ability of the company to repay its debt and determine the liquidity position of the company.

8. What are the basic concepts covered in Accounting for Partnership Class 12 Accountancy?

Students can download NCERT Solutions Class 12 Accountancy on the internet via Vedantu, which provides all NCERT solutions free of cost. The basic concepts covered include the following:

Concepts of partnership and partnership deed

Computation of appropriation items and change items

Maintenance of capital accounts of partner fixed and fluctuating capital

Profit and loss appropriation account

Adjustments and guarantee of profits to a partner from the past

Valuation and treatment of goodwill.

9. What is the best method to score good marks in Class 12 Accountancy Chapter 5?

The best method to score good marks in Class 12 Accountancy Chapter 5 is to study the chapter thoroughly and understand all concepts. NCERT Solutions Class 12 Accountancy can help students to understand the concepts easily. Students can download NCERT Solutions Class 12 Accountancy from the vedantu website and the app. They can save the notes on their computer and can refer to them for their exam preparation. This can help them to score good marks easily.