5 Some companies in order to cover up their bad financial position resort to window dressing i.e., showing a better position than the one which really exists. What is ‘Window Dressing’? Explain with the help of an example. They change their balance sheet in such a way that the important fact and truth may be concealed. 4 Window Dressing: Some companies in order to cover up their bad financial position resort to window dressing i.e., showing a better position than the one which really exists. State the main limitation of Current Ratio. But a much higher ratio may be considered to be adverse from the view point of management on account of the following reasons:ġ.) A much higher ratio indicates that inventory might be pilling up because of poor sales.Ģ.) Large amount is locked up in trade receivables due to inefficient collection policy. The higher the ratio the better it is, because the firm will be able to pay its current liabilities more easily. 3 The Current Ratio of a Company is 3:1 means that current assets of a business thrice of its current liabilities. (b) Analysis for long term debts :- Solution vency Ratio (a) Analysis for short term debts :- Liquidity Ratio What ratios will you calculate for the following purposes: (a) Analysis for short term debts, and (b) Analysis for long term debts? For example while calculating the credit analysis of a customer seeking credit, he may deserve the credit to be granted on the basis of financial statements submitted by him but in reality his character and credit worthiness mat be doubtful. 1 Ratio analysis is the quantitative measurement of the performance of a business. “Accounting Ratios ignore qualitative factors and are also not comparable if different firms follow different accounting policies.” Comment. DK Goel Solutions Chapter 5 Accounting Ratios Class 12 Accountancy On our website we have provided solutions for all chapters given in the DK Goel Accountancy Book for Class 12. This DK Goel Book for Grade 12 Accountancy will be very useful for exams and help you to score good marks in Class 12 accountancy examinations. All solutions provided below can be downloaded in Pdf and are available for free. Refer to the solutions provided below prepared by CBSE NCERT teachers Chapter 5 Accounting Ratios DK Goel Class 12 SolutionsĬlass 12 Accountancy students should read the following DK Goel Solutions for Class 12 Chapter 5 Accounting Ratios in Standard 12. This will help Class 12 DK Goel Accountancy students to understand the questions properly. We have provided solutions for all questions and have also provided short notes for each problem. Students in Class 12 who study accountancy and use the DK Goel Accountancy book to understand concepts of Chapter 5 Accounting Ratios should understand the concepts and solve practice questions and exercises given at the end of the chapter. These DK Goel Class 12 Solutions help commerce students in class 12 understand accountancy and build a strong base in accounts. These DK Goel Accountancy Class 12 solutions have been prepared based on the latest book for DK Goel Class 12 for the current academic year by expert accounts teachers at. Read DK Goel Class 12 Accountancy Solutions for Chapter 5 Accounting Ratios below.
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