How will you disclose the following item | Class 12 Accountancy - Company Accounts and Analysis of Financial Statements Chapter Financial Statements of a Company, Financial Statements of a Company NCERT Solutions

The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.

Explain the usefulness of trend percentages in interpretation of financial performance of a company.

The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?

What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover

What do you understand by analysis and interpretation of financial statements? Discuss its importance.

Describe the different techniques of financial analysis and explain the limitations of financial analysis.

What are liquidity ratios? Discuss the importance of current and liquid ratio.

State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors

What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.

Explain how common size statements are prepared giving an example.

List the techniques of Financial Statement Analysis.

What is meant by ‘Premium on Redemption of Debentures’?

Explain the nature of the financial statements.

What is meant by redemption of debentures by conversion?

Describe the meaning of ‘Debenture Issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?

State the meaning of ‘Debentures issued as a collateral security’.

What is ‘Capital Reserve’?

What is meant by a ‘Irredeemable Debenture’?

What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover

How debentures are different from shares? Give two points.