Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Analysis of Financial Statement NCERT Solutions | Distinguish between Vertical and Horizon

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

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 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.

What do you mean by Common Size Statements?

List the techniques of Financial Statement Analysis.

State the meaning of Analysis and Interpretation.

What are Comparative Financial Statements?

State the importance of Financial Analysis?

What do you mean by Ratio Analysis?

State the meaning of financial statement analysis?

What does a Bearer Debenture mean?

What are various types of ratios?

What are limitations of financial statement analysis?

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

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

List any three objectives of analysing financial statements?

What is meant by ‘Issue of debentures for consideration other than cash’?

What is ‘Capital Reserve’?

List any three objectives of analysing financial statements?

How debentures are different from shares? Give two points.

What is meant by ‘Mortgaged Debentures’?

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

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.

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

Can a company purchase its own debentures in the open market? Explain.

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?