Accounting ratios are critical financial analysis tool for Management of any business concern.

Course objectives:

1. Students should be able to analyse the financial statements of any business

2. To know the areas of the business that need more attention

3. To know the potential areas that can be improved

4. To know deeper analysis of the profitability, liquidity, solvency and efficiency of the business

5. To provide information for making cross sectional of analysis by comparing the performance with the best industry standards

6. To provide information derived from financial statements useful for making projections and estimates for the future

Coverage of Ratios:

1. Liquidity ratios

   Current Ratio and liquid ratio

2. Solvency ratios

  Debt-equity ratio

  Proprietary ratio

  Interest coverage ratio

3. Performance ratios

  Inventory turnover

  Trade receivable turnover

  Average collection period

  Trade payable turnover

  Average payment period

  Working capital turnover

4. Profitability ratios

  Gross profit ratio

  Net profit ratio

  Operating profit ratio

  Operating ratio

  Return on investment

Studying the inter-ratio relationship.