Chapter 5 • Accountancy Part 2 • Class 12 — interactive practice for liquidity, solvency, activity and profitability ratios with calculation, interpretation, tabulation and reverse-formula questions.
Accounting Ratios is a core area of Class 12 Accountancy because it converts accounting figures into meaningful relationships. Instead of looking at isolated amounts, ratio analysis helps students study liquidity, solvency, efficiency and profitability. This DigiSadhan online worksheet is built for repeated practice: every new test generates fresh numerical combinations and the worksheet can be shuffled again to create another practice set.
An accounting ratio is a mathematical relationship between two accounting figures. Ratios may be expressed as a pure number, a percentage, a fraction or a number of times. The format depends on the particular ratio and the question. Ratio analysis is useful because large accounting statements can be simplified into relationships that are easier to compare and interpret.
Accounting ratios in this chapter are commonly grouped into Liquidity Ratios, Solvency Ratios, Activity Ratios and Profitability Ratios. Each group answers a different question. Liquidity focuses on short-term obligations; solvency considers long-term financial structure; activity examines efficiency; and profitability studies the earning performance of the business.
Current Ratio = Current Assets ÷ Current Liabilities. Current assets are expected to be realised or used in the normal operating cycle or within the relevant short-term period, while current liabilities are obligations expected to be settled in the relevant short-term period. For numerical questions, identify both totals before dividing.
Quick Ratio = Quick Assets ÷ Current Liabilities. Quick assets are more readily convertible into cash than inventory and prepaid expenses. A common calculation is Quick Assets = Current Assets − Inventory − Prepaid Expenses, when those items are included in current assets and the question follows that convention.
Sometimes the ratio and one component are known while the other is unknown. If Current Ratio is known and Current Liabilities are given, Current Assets can be calculated as Current Ratio × Current Liabilities. If Current Assets are given, Current Liabilities can be found by dividing Current Assets by the ratio.
When Quick Ratio and Current Liabilities are given, Quick Assets = Quick Ratio × Current Liabilities. If current assets and other excluded items are known, students can then compare the calculated quick assets with the available information.
Debt-Equity Ratio compares debt with shareholders’ funds. A commonly used form is Debt-Equity Ratio = Long-term Debt ÷ Shareholders’ Funds. Follow the exact definition and components specified in the question or textbook convention.
Proprietary Ratio = Shareholders’ Funds ÷ Total Assets. It indicates the proportion of total assets financed by shareholders’ funds. Depending on the question, it may be expressed as a ratio or percentage.
This ratio establishes a relationship between total assets and long-term debt. It can be used to examine the asset coverage available in relation to debt. Always use the precise figures requested rather than substituting current liabilities without instruction.
Interest Coverage Ratio = EBIT ÷ Interest. EBIT means earnings before interest and tax. This ratio focuses on the ability of operating earnings to cover interest obligations. In reverse questions, interest or EBIT can be derived by rearranging the formula.
Activity ratios, also called turnover ratios, study how efficiently selected assets or working-capital components are used. Common examples include Inventory Turnover Ratio, Trade Receivables Turnover Ratio, Trade Payables Turnover Ratio and Working Capital Turnover Ratio.
A common formula is Cost of Revenue from Operations ÷ Average Inventory. Average inventory is generally calculated as (Opening Inventory + Closing Inventory) ÷ 2 when both figures are provided. Students should avoid using only closing inventory if the question clearly asks for average inventory.
A common formula is Credit Revenue from Operations ÷ Average Trade Receivables. If opening and closing trade receivables are available, calculate the average before finding the turnover. Read carefully whether the question provides total revenue or only credit revenue.
This ratio studies the relationship between credit purchases and average trade payables. Where opening and closing balances are supplied, average trade payables can be calculated before division. Do not confuse trade payables with total current liabilities.
Working Capital = Current Assets − Current Liabilities. Working Capital Turnover Ratio relates revenue or cost-based activity, as specified, to working capital. A negative or unusually small working-capital figure should be handled according to the question rather than assumed to be an error.
Gross Profit Ratio = Gross Profit ÷ Revenue from Operations × 100. Gross Profit generally equals Revenue from Operations minus Cost of Revenue from Operations. This ratio is useful for studying the gross margin generated from operations.
A commonly used formula is (Cost of Revenue from Operations + Operating Expenses) ÷ Revenue from Operations × 100. The ratio focuses on operating cost in relation to operating revenue. Students must classify operating and non-operating items carefully.
Operating Profit Ratio = Operating Profit ÷ Revenue from Operations × 100. Operating profit is generally connected with operating revenue and operating costs. Reverse calculations may ask students to derive operating profit from a known percentage.
Net Profit Ratio = Net Profit ÷ Revenue from Operations × 100. When net profit and revenue are given, divide profit by revenue and multiply by 100. When the ratio is given, rearrange the formula to find the missing amount.
Return-based ratios relate a profit measure to an investment or capital base. A common classroom formula for ROCE is EBIT ÷ Capital Employed × 100. Use the exact profit and capital definitions specified in the question.
Average balances are important in turnover ratios because transactions occur throughout the year. If opening and closing balances are supplied, average = (opening + closing) ÷ 2. The worksheet includes several questions that require this additional step before division.
Students frequently lose marks by writing a percentage where the answer should be expressed in times, or vice versa. Current Ratio, Quick Ratio, Debt-Equity Ratio and many turnover ratios are commonly presented as times or a proportion. Gross Profit Ratio, Net Profit Ratio and operating percentages are normally expressed as percentages.
Reverse questions become easier when the formula is rearranged. For example, if Net Profit Ratio = 10% and revenue = ₹6,00,000, Net Profit = 10/100 × ₹6,00,000 = ₹60,000. If Current Ratio = 2:1 and Current Liabilities = ₹2,00,000, Current Assets = ₹4,00,000.
Tabulation questions present multiple figures in rows and columns. This worksheet generates table-based ratio tasks involving opening balances, closing balances, revenue, expenses, assets and liabilities. First identify the required row, then calculate the ratio using the correct formula.
Before looking at the choices, write the formula mentally. Estimate the answer if possible and then compare the options. In this tool, answer options are shuffled for every generated MCQ, so students should not rely on a fixed answer position such as Option A.
Every calculation question provides an answer textbox. Enter the numerical result and press Check Answer. The checker permits a small rounding tolerance for numerical calculations. Correct entries receive green feedback; incorrect entries receive red feedback and an animation.
The score counts questions that are correctly checked on their first scoring attempt. The progress bar measures the number of questions checked. At completion, the final result displays the score and percentage. This gives students a quick way to monitor practice performance.
Students can select no timer or a timed test. Timed practice can improve speed after formulas are understood. Start with untimed practice, then use 20 or 30 minutes for mixed revision. When the timer reaches zero, the test ends and the current score is displayed.
A ratio should be interpreted with context. A single year's ratio does not necessarily show whether performance has improved. Compare the ratio with previous years, suitable standards or other relevant information. The direction of a ratio can also be influenced by changes in accounting policy, business conditions and the composition of underlying figures.
Learn formulas with their meaning rather than memorising symbols alone. Practise direct calculations first, then reverse calculations and interpretation. For long questions, show the formula, substitute the figures, calculate carefully and write the appropriate unit.
Step 1: Identify the requested ratio. Step 2: collect only the figures required by its formula. Step 3: calculate and write the correct unit. This method prevents irrelevant figures from entering the calculation.
Start with 10 questions to revise formulas. Move to 20–50 mixed questions. Then attempt 100 or more questions under a timer. Use Shuffle Whole Worksheet for another set and focus particularly on questions previously answered incorrectly.
The worksheet intentionally requires students to press Start New Test before attempting answers. This avoids accidental scoring on an uninitialised page. Every new test resets the score, timer, progress and question set.
Shuffle generates a new worksheet using the selected question count. The generator uses a uniqueness key to prevent duplicate question objects within a single generated set. Because figures and templates vary, repeated practice can expose students to many different numerical combinations.
Save as PDF creates a downloadable PDF directly using the browser's PDF library and does not call the print command. Print is a separate action for the browser's printing workflow. For extremely large worksheets, smaller question batches may work better on low-memory mobile devices.
Animated icons, immediate feedback, progress tracking and touch-friendly controls make this worksheet suitable for independent practice. The interface is responsive for phones, tablets and desktops, with wide tables placed inside horizontal scrolling containers for small screens.
Teachers may assign a fixed question count for revision or classroom practice. Parents can encourage short daily practice sessions. Students should use the answer display as a correction tool and repeat similar questions rather than simply memorising displayed answers.
Wrong answers are part of learning. The red feedback indicates that the entered result did not match the expected calculation. Review the formula, redo the arithmetic and try another generated worksheet. Over repeated sessions, students can improve both accuracy and speed.
Liquidity → Solvency → Activity → Profitability → Formula → Calculation → Interpretation. Use this sequence as a quick mental map while revising Accounting Ratios.
This DigiSadhan Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios Online Practice Worksheet provides a large, repeatable practice environment with generated numerical questions, MCQs, tabulation and sub-parts. Select a test size, start a new test, solve each question, check your answer, review mistakes and shuffle the worksheet for another fresh practice set.