Loss Account Ratio Limitations of Ratios
Ratio analysis is an important tool for bankers and lenders to assess various factors such as liquidity position, profitability, solvency, financial stability, quality of management, and the safety and security of loans and advances. Ratios can be expressed as percentages or proportions, indicating the relationship between net profit and sales. They can also be expressed in terms of one figure being a multiple or fraction of another. Ratios can be classified into balance sheet ratios and income statement ratios. However, it is important to note that ratios have limitations.The text can beas follows while keeping the and their contents:
Financial ratios such as Loss Financial Ratio, Operating Ratio, Composite Ratio, Current Ratio, Quick Asset Ratio, Proprietary Ratio, Debt Equity Ratio, Gross Profit Ratio, Expense Ratio, Net profit Ratio, Stock Turnover Ratio, Fixed Asset Tur
...nover Ratio, Return on Total Resources Ratio and Return on Own Funds Ratio are significant in assessing the financial health of an organization.
Preliminary or Preoperative expenses should be noted. Liabilities have a credit balance while Assets have a debit balance. Current Liabilities are payments due within 12 months from the current date. Current Assets can change within 12 months.
Working Capital or Gross Working Capital refers to Current Liabilities and Current Assets. Net Worth & Long Term Liabilities are considered Long Term Sources of Funds, while Current Liabilities are classified as Short Term Sources of Funds. Assets other than Current Assets are categorized as Long Term Use of Funds.
Installments of Term Loan Payable within 12 months are considered as Current Liability only for calculating the Current Ratio & Quick Ratio. Any profit becomes par
of Net Worth under the Reserves category, while any loss becomes part of Intangible Assets.
Investments in Gobo.Cruel need to be treated currently if they are marketable and due.
- Payment essays
- Rate Of Return essays
- Funding essays
- Hedge Fund essays
- Asset essays
- Capital market essays
- Day Trading essays
- Depreciation essays
- Discounted Cash Flow essays
- Foreign Direct Investment essays
- Funds essays
- Futures Trading essays
- Internal Rate Of Return essays
- Million essays
- Revenue essays
- Accountability essays
- Accounting Software essays
- Accounts Receivable essays
- Auditor's Report essays
- Balance Sheet essays
- Cash essays
- Cash Flow essays
- Costs essays
- Financial Audit essays
- Internal Control essays
- International Financial Reporting Standards essays
- Management Accounting essays
- Principal essays
- Tax essays
- Bank essays
- Banking essays
- Corporate Finance essays
- Credit Card essays
- Currency essays
- Debt essays
- Donation essays
- Enron Scandal essays
- Equity essays
- Financial Accounting essays
- Financial Crisis essays
- Financial News essays
- Financial Ratios essays
- Financial Services essays
- Forecasting essays
- Foreign Exchange Market essays
- Free Market essays
- Gold essays
- Investment essays
- Legacy essays
- Loan essays
