Bank Theory

Ratio Analysis - Notes and MCQs Ratio Analysis - Notes and MCQs Meaning of Accounting Ratios Accounting ratios are numerical expressions that represent relationships between various items in the financial statements. They are used to assess the financial health and performance of a business. Classification of Ratios Liquidity Ratios: Measure the firm's ability to meet short-term obligations (e.g., Current Ratio, Quick Ratio). Solvency Ratios: Measure long-term financial stability (e.g., Debt-Equity Ratio). Profitability Ratios: Measure the firm's ability to generate profit (e.g., Net Profit Ratio, Return on Capital Employed). Efficiency Ratios: Indicate how efficiently the business uses its resources (e.g., Inventory Turnover Ratio). Uses of Accounting Ratios Assess operational efficiency Analyze financial performance over time ...

Leasing and Hire Purchase - Complete Study Notes Lease Finance Lease finance is an arrangement where one party (lessor) provides an asset for use to another party (lessee) for a specified period in exchange for periodic payments called lease rentals. It allows businesses to use expensive equipment without purchasing them outright, preserving working capital. Mathematical Example: Suppose a machine costs ₹10,00,000 and is leased for 5 years at an annual lease rental of ₹2,50,000. Find the Net Present Value (NPV) of leasing at a discount rate of 10%. NPV = Σ [Lease Rental / (1 + r)^t] = (2,50,000 / 1.1) + (2,50,000 / 1.1²) + (2,50,000 / 1.1³) + (2,50,000 / 1.1⁴) + (2,50,000 / 1.1⁵) = ₹9,47,808.24 Evolution of Leasing in India Leasing was formally introduced in India in the late 1970s. Financial institutions like First Leasing Company of India pioneered the leasing industry. Over time, regulat...