Ratio is a mathematical expression of relationship between two related or interdependent items.

**Meaning
of accounting ratios**

Ratio is a mathematical
expression of relationship between two related or interdependent items. It is
the numerical or quantitative relationship between two items. It is calculated
by dividing one item by the other related item. When ratios are calculated on
the basis of accounting information, these are called ‘accounting ratios’.

Accounting ratios can be
expressed in any of the following forms:

**(i) Pure**: It is expressed as a
quotient. Example: 2 or 2:1.

**(ii) Percentage**: It is expressed
in percentage. Example: 25%.

**(iii) Times**:It is expressed as
certain number of times of a particular figure. Example: 4 times.

Tags : Ratio Analysis | Accountancy Ratio Analysis | Accountancy

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