RATIO ANALYSIS

Jun 21st, 2015
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The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Ratio Analysis Is applied to Financial Statements to analyze the success, failure, and progress of business.

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RATIO ANALYSISThe Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Ratio Analysis Is applied to Financial Statements to analyze the success, failure, and progress of business.Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this ratios are compared with the average of businesses similar to ones business and compare ones own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before your business is destroyed by them.1. CURRENT RATIO Current Assets Marketable investment +raw material and stores +Other stock + Accrued Income +Advances + deposits with GOVT +Advance payment of tax + Other Receivables + Finished goods and semi finished goods + Receivables + Sundry Debtors + Cash in hand + cash at Bank Current LiabilitiesCurrent LIABILITIES & PRIVISIONS + PROVISIONS WHICH ARE GIVEN AT THE LIABILITY SIDE OF THE BALANCE SHEET Formula of current ratio Current Ratio = Current Assets / Current LiabilitiesYearsCurrent assets Current liabilities Current ratio 1996 1903.819220.9919972384.7251

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