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: (B) Classification by Users: This [...]
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 provide time perspective to the [...]
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 increase in fixed assets, the [...]