Class 12 Accounting Ratios Formulas | CBSE Commerce Guide 2026
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Class 12 Accounting Ratios Formulas (CBSE) – Complete Commerce Guide 2026
Accounting Ratios are one of the most scoring and important topics in CBSE Class 12 Accountancy. Questions from this chapter are almost guaranteed in the board exam and are frequently asked in numerical, case-based, and MCQ formats.
This article provides a complete list of Accounting Ratios formulas, explained simply so students can revise quickly and score full marks.
What Are Accounting Ratios?
Accounting ratios are relationships between financial figures taken from the Balance Sheet and Profit & Loss Account.
They help in analysing a firm’s:
-
Liquidity
-
Profitability
-
Solvency
-
Efficiency
CBSE Weightage: 8–12 marks (varies by paper pattern)
Classification of Accounting Ratios – Class 12 CBSE
| Type of Ratio | Purpose |
|---|---|
| Liquidity Ratios | Measure short-term financial position |
| Solvency Ratios | Measure long-term stability |
| Activity Ratios | Measure efficiency of operations |
| Profitability Ratios | Measure earning capacity |
Liquidity Ratios – Formulas
| Ratio | Formula |
|---|---|
| Current Ratio | Current Assets ÷ Current Liabilities |
| Quick Ratio | (Current Assets − Inventory − Prepaid Expenses) ÷ Current Liabilities |
Ideal Current Ratio: 2 : 1
Ideal Quick Ratio: 1 : 1
Solvency Ratios – Formulas
| Ratio | Formula |
|---|---|
| Debt-Equity Ratio | Long-Term Debt ÷ Shareholders’ Funds |
| Proprietary Ratio | Shareholders’ Funds ÷ Total Assets |
| Total Assets to Debt Ratio | Total Assets ÷ Long-Term Debt |
Activity (Turnover) Ratios – Formulas
| Ratio | Formula |
|---|---|
| Inventory Turnover Ratio | Cost of Revenue from Operations ÷ Average Inventory |
| Trade Receivables Turnover Ratio | Net Credit Sales ÷ Average Trade Receivables |
| Trade Payables Turnover Ratio | Net Credit Purchases ÷ Average Trade Payables |
| Working Capital Turnover Ratio | Revenue from Operations ÷ Working Capital |
Profitability Ratios – Formulas
Based on Sales
| Ratio | Formula |
|---|---|
| Gross Profit Ratio | (Gross Profit ÷ Revenue from Operations) × 100 |
| Operating Profit Ratio | (Operating Profit ÷ Revenue from Operations) × 100 |
| Net Profit Ratio | (Net Profit ÷ Revenue from Operations) × 100 |
Based on Investment
| Ratio | Formula |
|---|---|
| Return on Investment (ROI) | (Net Profit ÷ Capital Employed) × 100 |
| Return on Equity (ROE) | (Net Profit after Tax ÷ Shareholders’ Funds) × 100 |
| Earnings Per Share (EPS) | Net Profit after Tax ÷ No. of Equity Shares |
Important Terms to Remember (CBSE Exams)
-
Capital Employed = Total Assets − Current Liabilities
-
Operating Profit = Gross Profit − Operating Expenses
-
Working Capital = Current Assets − Current Liabilities
How to Score Full Marks in Accounting Ratios
✔ Always write the formula first
✔ Show proper working notes
✔ Mention units (times or %)
✔ Follow NCERT format strictly
✔ Round off answers properly
Board Tip: Even if final answer is wrong, steps + formula fetch marks.
Most Asked Accounting Ratios in Exams
-
Current Ratio
-
Debt-Equity Ratio
-
Gross Profit Ratio
-
Inventory Turnover Ratio
-
Return on Investment
Click here to know about CBSE Class 12 Accountancy Syllabus 2025–26 | Complete Guide for 2026 Boards: https://dekhocampus.com/news/cbse-class-12-accountancy-syllabus-2025-26
FAQs (Frequently Asked Questions)
Current Ratio and Gross Profit Ratio are easiest and most asked.
Students should prepare all standard CBSE-prescribed ratios.
Yes, they are useful for CUET, CA Foundation basics, and business studies.
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