Cheat sheet · Class 12 · CBSE · Commerce Accountancy
Accounting Ratios cheat sheet
The whole chapter on one page: key formulas, facts and the points to remember, for quick revision before a test.
CBSE Class 12 · Accountancy
Cheat sheet
Chapter 9Accounting Ratios
Liquidity, Solvency, Activity (turnover), Profitability.
1. Key Ratios
| Ratio | Formula | Ideal / note |
|---|---|---|
| Current ratio | current assets / current liabilities | 2 : 1 |
| Quick ratio | quick assets / current liabilities | 1 : 1 |
| Debt–equity | long-term debt / shareholders' funds | 2 : 1 (max) |
| Total assets to debt | total assets / long-term debt | higher is safer |
| Proprietary ratio | shareholders' funds / total assets | |
| Interest coverage | profit before interest & tax / interest | |
| Inventory turnover | cost of revenue from operations / average inventory | |
| Trade receivables turnover | credit revenue / average receivables | |
| Gross profit ratio | GP / revenue × 100 | |
| Net profit ratio | NP / revenue × 100 | |
| Return on investment | PBIT / capital employed × 100 |
Quick assets = current assets − inventory − prepaid expenses.
2. Key Points
- Capital employed = shareholders' funds + non-current liabilities.
- Working capital turnover = revenue / working capital.
- Operating ratio + operating profit ratio = 100%.
- Ratios must be compared to be meaningful.
Remember: 4 categories | current & quick | debt–equity | turnover | ROI
Accounting Ratios: questions and notes
More Class 12 · CBSE · Commerce Accountancy cheat sheets
- Accounting for Partnership Firms – Fundamentals
- Reconstitution of a Partnership Firm – Admission of a Partner
- Reconstitution of a Partnership Firm – Retirement/Death of a Partner
- Dissolution of Partnership Firm
- Accounting for Share Capital
- Issue and Redemption of Debentures
- Financial Statements of a Company
- Analysis of Financial Statements
- Accounting Ratios
- Cash Flow Statement
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