Before writing this article , I have cleared the definition and objective in my MBA finance coaching article .
Today , I am teaching you Ratio Analysis . This is the concept of management accounting .
Dear friends ,
Ratio analysis is a tool which we can use for our business planning . In this picture you are seeing different ratio with their values . Tally 7.2 is best because , it reduce account manager’s hard work relating to calculating these ratios . If there is some mistake in calculating , it can harmful for business planning .But there is 100% sure that Tally calculates correct ratio .
you are seeing that I have made 4 voucher entries in tally 7.2 after making of these entries I found above ratio . If you will not write any voucher entries , you will not get any ratio . Before writing these voucher entries below picture shows Nil ratio of every type . But one think is more important for you that you must know about ratio and its type
Suppose we take current ratio
you are seeing that it is ratio of current asset and current liabilities . But for taking decision , it is your duty that what proportion of current asset is suitable for this other wise , your all hard work will not carry any good result for business . As a good accounts manger , you must learn different ratio and its effect on your business revenue ,financial position . Ratios are for main types
- short term financial position - current ratio , quick ratio , absolute quick ratio
- long term financial position - net wealth ratio , rate of return on investment ,
Capital gearing ratio
- performance ratio , turnover ratio
- revenue or profitability ratio