Ratio Analysis
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 82 rapid-fire Q&A cards.
****Profit & Loss Account Ratios?
computed only from the P&L (e.g. Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio).
****Balance Sheet Ratios?
computed only from the Balance Sheet (e.g. Current Ratio, Quick Ratio, Debt-Equity Ratio).
****Composite / Inter-statement Ratios?
use figures from BOTH P&L and Balance Sheet (e.g. Stock Turnover Ratio, Debtors Turnover Ratio, Return on Investment).
****Profitability Ratios?
measure earning capacity (GP Ratio, NP Ratio, ROI, ROE, EPS, P/E).
****Turnover / Activity Ratios?
measure efficiency of asset utilisation (Stock Turnover, Debtors Turnover, Debt Collection Period).
****Financial / Solvency Ratios?
measure ability to meet obligations
****Simplify financial statements?
dense rupee figures collapse into one comparable number.
****Facilitate inter-firm comparison?
compare borrower against industry peers / RBI sectoral data.
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