Archive | Financial Analysis

Classification of Ratios | Accounting

In this article we will discuss about the classification of ratios in accounting. The accounting ratios may be classified on the following bases leading to somewhat overlapping categories: (A) Classification by Statements: The Traditional classification is based on those statements from which information is obtained for calculating the ratios. The ratios are classified as follows: […]

Tools of Financial Analysis | Company

In this article we will discuss about the three important tools of financial analysis. 1. Comparative Financial Statement: The preparation of comparative financial and operating statement is an important device of horizontal financial analysis. As their very name suggests, comparative financial statements are statements of the financial position of a business so designed as to […]

Revenue Statement Ratios

This article throws light upon the top three types of revenue statement ratios. The types are: 1. Expenses Ratio 2. Earning Ratios 3. Profit Cover Ratios. Type # 1. Expenses Ratio: (a) Fixed Expenses to Total Cost Ratio: It indicates the idle capacity in the organisation. If this ratio gradually increases without, however, a corresponding […]

Notes on Standard Ratio

An analyst irrespective of his cast and creed has; however, to bear in mind that, interpretation of Financial Statements of a firm with the help of ratios becomes significant and meaningful when the same is accomplished in the backdrop of some established Standard in this regard. This Standard depends upon the own experience of the […]

Balance Sheet and Revenue Statement Ratios

This article throws light upon the top two types of balance sheet and revenue statements ratios. The types are: 1. Turnover or Velocity Ratios 2. Profitability Ratios. Type # 1. Turnover or Velocity Ratios: (a) Stock/Inventory-Turnover Ratio: This ratio shows the relationship between inventory at close of the business and the overall turnover. In other […]

Balance Sheet Ratios Types

This article throws light upon the top six types of balance sheet ratios. The types are: 1. Current Ratio 2. Liquid Ratio 3. Absolute Liquidity Ratio 4. Proprietary Ratio 5. Assets to Proprietorship Ratio 6. Debt-Equity Ratio. Type # 1. Current Ratio: In the last decade of the 19th century, when the number of Financial […]

Financial Advisor: Meaning and Functions

After reading this article you will learn about meaning and functions of financial advisor. Meaning of Financial Adviser: Financial Advisers (FA) were nominees of the Ministry of Finance till late 70’s. They usually belonged to the category of All India Accounting Services (AIAS) and were nominated. As per recommendation of the Administrative Reforms Commissions, his […]

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