Ratio Analysis - 3
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 73 rapid-fire Q&A cards.
Define accounting ratio.
Mathematical expression showing relationship between two logically connected figures from financial statements.
Name three types of ratios by statement source.
P&L Account Ratios, Balance Sheet Ratios, Composite/Inter-statement Ratios.
What are the five functional ratio classifications?
Profitability, Turnover/Activity, Short-term Solvency, Long-term Solvency/Leverage ratios.
State the ideal Current Ratio benchmark per Tandon-Chore framework.
1.33:1 for bank-financed working-capital units.
What Current Ratio level triggers SMA watch in credit-rating models?
Below 1.17 in most internal credit-rating models.
Define Quick Ratio and state its ideal level.
Removes least-liquid assets (stock/prepayments) from current assets; ideal is 1:1.
What does Fixed Assets Ratio > 1 signal?
Part of working capital funded by long-term sources; weak working-capital planning.
What does Fixed Assets Ratio < 1 signal?
Fixed assets partly financed by short-term liabilities; structural asset-liability mismatch.
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