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Accountancy · 2023 · 3 marks
CBSE 2023 · Region 3 · Set 1 · Q32
Identify and state the significance of any two ratios that are calculated to measure the efficiency of operations of business based on effective…
Identify and state the significance of any two ratios that are calculated to measure the efficiency of operations of business based on effective utilisation of resources.
Marking-scheme solution
Significance of Turnover Ratios (any two):
(i)
Inventory Turnover ratio studies the frequency of conversion of inventory of
finished goods into revenue from operations.
(ii)
Trade Receivables Turnover ratio indicates the speed with which trade
receivables are realized
OR
It indicates the number of times the trade receivable are turned over and converted
into cash in an accounting period.
(iii)
Trade Payables Turnover ratio reveals the average payment period.
(iv)
Working Capital Turnover ratio reflects the efficiency of the enterprise in
utilization of working capital.
(v)
Net Assets or Capital Employed Turnover ratio reflects the efficiency in
utilization of capital employed/net assets.
(vi)
Fixed Assets Turnover ratio reflects the efficiency in utilization of fixed
assets.
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CBSE Class 12 Accountancy past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.