All accounting ratios pdf
past performance or another company. Thus, the ratios of firms in different industries, which face different risks, capital requirements, and competition are usually hard to compare. In the analysis of financial statements it is better to have a complete understanding of the different types of ratios, their calculation, and interpretation. A debt ratio of.5 means that there are half as many liabilities than there is equity. In other words, the assets of the company are funded 2-to-1 by investors to creditors. This means that investors own cents of every dollar of company assets while cred- itors only own cents on the dollar. Accounting Ratios the financial statements, it is termed as accounting ratio. For example, if the gross profit of the business is Rs. 10, and the ‘Revenue from Operations’ are Rs. 1,00,, it can be said that the gross profit is 10% × 10, 1,00, of the ‘Revenue from Operations’.