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3
15000/5000 = 3, or 3:1.
Class 12 · English Version · Accounting
Structured accounting problems
Solve a structured accounting case and explain the limits of ratios.
Shared cross-level core and stretch unit. Start with the core questions, then use the stretch example for deeper work. The same unit is available in related class and board pathways; it is not a full grade-specific or examination-specification course. A teacher should select the appropriate depth and further topics.
Learn the idea
A ratio compares defined quantities from the statements. Current ratio = current assets/current liabilities. A higher ratio is not always better: idle stock or overdue receivables may not provide cash when needed. Interpret the business, period and accounting policies before comparing.
Worked example
Current assets 12,000 and current liabilities 6,000 give current ratio 2:1. If stock is 5,000, quick assets are 7,000 in the simplified definition, so quick ratio is about 1.17:1.
- Define the ratio and denominator.
- Calculate from consistent statements.
- Interpret with cash timing and context.
Stretch example
Return on capital employed must use a consistent profit and capital definition. A rise can reflect a smaller denominator as well as better operating profit; inspect both before explaining the change.
Your written practice
Show your working on paper and enter your answer here. If it does not match, compare the model and try again.
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25
5000/20000 × 100 = 25.
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no
A ratio is one limited comparison.
Write in your own words. A guardian or teacher should review this response.
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They may not become cash in time to pay current obligations.
Connect collection timing to payments.
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Different business models and accounting policies can change the ratios independently of performance.
Use specific relevant differences.
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20
6000/30000 × 100 = 20.
Write in your own words. A guardian or teacher should review this response.
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Different denominators can produce different returns from the same profit.
Make the method reproducible.
Ratio commentary
Write a short commentary on two fictional businesses using three ratios.
Review with a guardian or teacher
- Define every ratio.
- Explain each result in context.
- State missing evidence before recommending action.
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