India's #1 AI Tutorworksheet · Accountancy · Chapter 10

CBSE Class 12 Accountancy Chapter 10 Accounting Ratios Worksheet with Answers

Accounting Ratios form the backbone of financial statement analysis in CBSE Class 12 Accountancy. This printable worksheet aligns completely with the NCERT syllabus and covers liquidity ratios (Current, Quick, Cash), solvency ratios (Debt-to-Equity, Total Assets to Debt, Proprietary, Interest Coverage), activity ratios (Inventory, Debtors, Creditors Turnover, Working Capital Turnover), and profitability ratios (Gross Profit, Operating, Net Profit, Return on Investment). Print this page, attempt under timed conditions, and check your work against the detailed answer key provided at the end.

Your child's private AI tutor — trained on NCERT.

3-day free trial · ₹1 to start · Cancel anytime.

Start 3-day free trial →

Key takeaways

✓This worksheet covers all NCERT topics: liquidity, solvency, activity, and profitability ratios with graded difficulty
✓Section A contains 6 multiple-choice questions testing conceptual understanding of ratio formulas and interpretations
✓Section D focuses on 5 short-answer computational questions commonly asked in CBSE board exams
✓Section E presents 3 HOTS questions requiring analysis, comparison, and interpretation of multiple ratios simultaneously
✓A case study question integrates real-world financial data to test application skills expected in 2025 board papers
✓Complete answer key with step-by-step working and brief explanations for every question aids self-assessment
✓Recommended time: 90 minutes; difficulty: Moderate to Advanced, matching CBSE board exam standard

Quick Chapter Recap: Accounting Ratios

Accounting Ratios are mathematical relationships between two or more financial statement items. Chapter 10 in NCERT Class 12 Accountancy divides ratios into four broad categories. Liquidity ratios measure the firm's ability to meet short-term obligations and include Current Ratio, Quick Ratio, and Cash Ratio. Solvency ratios assess long-term financial stability through Debt-to-Equity Ratio, Total Assets to Debt Ratio, Proprietary Ratio, and Interest Coverage Ratio. Activity ratios evaluate how efficiently assets are being utilised, covering Inventory Turnover, Debtors Turnover, Creditors Turnover, and Working Capital Turnover ratios. Profitability ratios gauge the earning capacity of the business and include Gross Profit Ratio, Operating Ratio, Operating Profit Ratio, Net Profit Ratio, and Return on Investment. Students must know the formula, significance, and ideal benchmarks for each ratio. Board examiners frequently ask for computation, interpretation, and comparative analysis across two years. Understanding the components of each ratio — for instance, Current Assets exclude non-current investments while Quick Assets further exclude inventory and prepaid expenses — is crucial for accuracy in calculations and scoring full marks in the 2025 CBSE board exam.

Liquidity ratios: Current Ratio = Current Assets ÷ Current Liabilities; Quick Ratio = Quick Assets ÷ Current Liabilities
Solvency ratios: Debt-to-Equity = Long-term Debts ÷ Shareholders' Funds; Interest Coverage = EBIT ÷ Interest on Long-term Debts
Activity ratios: Inventory Turnover = Cost of Revenue from Operations ÷ Average Inventory; Debtors Turnover = Net Credit Revenue ÷ Average Debtors
Profitability ratios: Gross Profit Ratio = (Gross Profit ÷ Revenue from Operations) × 100; Net Profit Ratio = (Net Profit ÷ Revenue from Operations) × 100
Always use averages for balance-sheet items (inventory, debtors, creditors) when computing turnover ratios

Worksheet Metadata and Instructions

This worksheet is designed for CBSE Class 12 students who have completed studying Chapter 10 Accounting Ratios from the NCERT textbook. The difficulty level is Moderate to Advanced, reflecting the typical mix of direct formula-based questions and higher-order analytical problems seen in recent CBSE board papers. Students should allocate 90 minutes to complete all sections under examination conditions. Keep a calculator, rough paper, and the NCERT textbook handy for reference after attempting. Do not look at the answer key until you have attempted every question; self-discipline during practice translates into confidence on exam day. The worksheet is structured to mirror the board exam pattern: objective questions first to build momentum, then short-answer computational problems, followed by long-answer and case-based questions that require interpretation and analysis. Each section progressively increases in difficulty. For maximum benefit, attempt this worksheet after revising the chapter thoroughly and solving NCERT exercise questions. Parents can print this page and use it as a timed mock test at home. Teachers may use it as classwork, homework, or a periodic assessment tool. The answer key at the end provides not just final answers but also the working steps and key points to include for full credit, making it a complete self-study resource.

Difficulty Level: Moderate to Advanced (aligned with CBSE board standard)
Suggested Time: 90 minutes (strict exam conditions recommended)
Materials Required: Calculator, rough paper, pen, printed copy of this worksheet
Attempt all sections sequentially; do not skip to the answer key prematurely
Use this worksheet after completing NCERT exercises and Class 12 Accountancy notes revision

Section A: Multiple Choice Questions (1 mark each)

Multiple-choice questions in CBSE Class 12 Accountancy board exams test quick recall of definitions, formulas, and conceptual clarity. For Accounting Ratios, MCQs often focus on identifying the correct formula, choosing the appropriate classification of a ratio, or selecting the right interpretation of a computed value. Students must read each option carefully because distractors are designed to catch common errors such as confusing Current Ratio with Quick Ratio or miscalculating the denominator in turnover ratios. In the 2024 board paper, one MCQ asked which item is excluded from Quick Assets, and many students incorrectly included prepaid expenses. Practice these six questions under timed conditions, allowing roughly one minute per question. Do not spend more than 90 seconds on any single MCQ; if unsure, mark your best guess and move on. Return to flagged questions only if time permits at the end. Remember that there is no negative marking in CBSE board exams, so never leave an MCQ unattempted. Cross out obviously incorrect options first to narrow your choices. Write the question number and your selected option clearly on your answer sheet. These questions carry one mark each, and scoring full marks in Section A sets a strong foundation for confidence in the remaining sections of the paper.

Q1. Which of the following is a liquidity ratio? (a) Debt-to-Equity Ratio (b) Operating Ratio (c) Quick Ratio (d) Proprietary Ratio
Q2. Current Ratio is 2.5:1 and Current Liabilities are ₹80,000. Current Assets will be: (a) ₹32,000 (b) ₹2,00,000 (c) ₹1,00,000 (d) ₹2,50,000
Q3. Inventory Turnover Ratio is calculated by dividing Cost of Revenue from Operations by: (a) Closing Inventory (b) Opening Inventory (c) Average Inventory (d) Total Inventory
Q4. Which of the following is NOT deducted while calculating Quick Assets? (a) Inventory (b) Prepaid Expenses (c) Debtors (d) Loose Tools
Q5. A Debt-to-Equity Ratio of 2:1 indicates: (a) For every ₹1 of equity, there is ₹2 of debt (b) For every ₹2 of equity, there is ₹1 of debt (c) Equity is double the debt (d) Current liabilities are twice current assets
Q6. Gross Profit Ratio is 25% and Revenue from Operations is ₹4,00,000. Gross Profit is: (a) ₹1,00,000 (b) ₹1,60,000 (c) ₹3,00,000 (d) ₹25,000

Section B: Fill in the Blanks (1 mark each)

Fill-in-the-blank questions require precise terminology and exact numerical answers. In Accounting Ratios, these questions often test knowledge of ratio components, standard benchmarks, or the relationship between two financial metrics. CBSE mark schemes award full credit only if the answer matches the model answer exactly, so spelling and numerical accuracy matter. For example, writing 'liquid ratio' instead of 'quick ratio' or '1.5' instead of '1.5:1' may cost you the mark. When a blank calls for a ratio value, always express your answer in the format specified in NCERT — typically as a pure ratio (2:1) or a decimal (2.0) or a percentage depending on the ratio type. If the question does not specify the format, follow NCERT convention: liquidity and solvency ratios as pure ratios, profitability ratios as percentages. Before writing your final answer, do a quick mental check: does this answer make logical sense? For instance, if Current Ratio is less than 1, the firm cannot meet short-term obligations, which is a red flag. Use your rough paper to show working even for fill-in-the-blanks; if you make a computational error, at least partial credit may be awarded if the examiner sees correct method. These five questions are designed to cover all four ratio categories from the NCERT syllabus.

Q7. Quick Ratio is also known as __________ Ratio.
Q8. If Current Assets are ₹1,50,000, Inventory is ₹30,000, Prepaid Expenses ₹5,000, and Current Liabilities ₹1,00,000, then Quick Ratio is __________.
Q9. The formula for Operating Ratio is (Cost of Revenue from Operations + Operating Expenses) ÷ __________ × 100.
Q10. Debtors Turnover Ratio measures the number of times __________ are converted into cash during the year.
Q11. Interest Coverage Ratio is calculated by dividing __________ by Interest on Long-term Debts.

Section C: Match the Following and True/False (1 mark each)

Matching and True/False questions assess breadth of understanding across the entire chapter. CBSE often uses match-the-following to link ratio names with their formulas or significance. Each correct match typically earns 0.5 or 1 mark depending on the total number of pairs. Students should first match the pairs they are absolutely certain about, then use elimination for the remaining options. In True/False questions, read the statement carefully and look for absolute words like 'always,' 'never,' or 'only' — these often make a statement false because accounting principles allow for exceptions. For Accounting Ratios, a common pitfall is assuming that a higher ratio is always better; for instance, a very high Current Ratio might indicate idle cash or poor inventory management, not necessarily strong liquidity. When marking True or False, if the question asks for justification, write one crisp sentence explaining your choice; CBSE mark schemes award full credit only when both the answer and reasoning are correct. Use the NCERT terminology exactly: write 'shareholders' funds' not 'equity,' 'revenue from operations' not 'sales,' and 'cost of revenue from operations' not 'cost of goods sold' unless the question uses a different term. This section contains 5 items combining both formats to give diverse practice.

Q12. Match the following ratios with their formulas: (A) Current Ratio → (i) Net Profit ÷ Revenue from Operations × 100; (B) Gross Profit Ratio → (ii) Current Assets ÷ Current Liabilities; (C) Debt-to-Equity Ratio → (iii) Gross Profit ÷ Revenue from Operations × 100; (D) Net Profit Ratio → (iv) Long-term Debts ÷ Shareholders' Funds.
Q13. True or False: Quick Assets include Inventory but exclude Prepaid Expenses.
Q14. True or False: A high Debt-to-Equity Ratio always indicates financial distress.
Q15. True or False: Inventory Turnover Ratio is an activity ratio that measures the efficiency of inventory management.
Q16. Match: (A) Liquidity Ratio → (i) Return on Investment; (B) Profitability Ratio → (ii) Interest Coverage Ratio; (C) Solvency Ratio → (iii) Quick Ratio; (D) Activity Ratio → (iv) Working Capital Turnover Ratio.

Section D: Short Answer Questions (3 marks each)

Short-answer questions in CBSE Class 12 Accountancy typically carry 3 or 4 marks and require both computation and brief interpretation. For Accounting Ratios, the standard format is: calculate two or three ratios from given financial data and state what each indicates about the firm's performance. The mark distribution is usually 2 marks for correct calculation (with working) and 1 mark for interpretation or stating the significance. Always write the formula first, substitute the values, show the working step-by-step, and box or underline your final answer. Even if your final answer is incorrect, you can earn method marks if your approach is sound. After computing the ratio, write one sentence interpreting the result — for example, 'A Current Ratio of 2.5:1 indicates that the company has ₹2.50 of current assets for every ₹1 of current liabilities, suggesting strong short-term liquidity.' CBSE examiners appreciate students who connect the ratio to real business implications. Avoid vague statements like 'the ratio is good'; instead, be specific: 'the ratio is above the ideal benchmark of 2:1, indicating adequate liquidity.' These five questions are drawn from past board papers and sample papers released by CBSE, covering liquidity, solvency, activity, and profitability ratios in rotation.

Q17. Current Assets ₹3,00,000; Inventory ₹80,000; Prepaid Expenses ₹20,000; Current Liabilities ₹1,50,000. Calculate Current Ratio and Quick Ratio. Comment on liquidity position.
Q18. Revenue from Operations ₹10,00,000; Gross Profit 20% on cost. Calculate Gross Profit Ratio.
Q19. Shareholders' Funds ₹5,00,000; Long-term Debts ₹3,00,000. Calculate Debt-to-Equity Ratio and Proprietary Ratio. Interpret solvency.
Q20. Cost of Revenue from Operations ₹8,00,000; Opening Inventory ₹1,00,000; Closing Inventory ₹1,40,000. Calculate Inventory Turnover Ratio and state its significance.
Q21. Net Profit after Tax ₹1,20,000; Revenue from Operations ₹6,00,000; Total Assets ₹10,00,000. Calculate Net Profit Ratio and Return on Investment. Comment on profitability.

Section E: Long Answer and HOTS Questions (5 or 6 marks each)

Long-answer questions test depth of understanding, analytical ability, and the skill to integrate multiple concepts. In CBSE board exams, a typical 5-mark or 6-mark question on Accounting Ratios provides financial data for two consecutive years and asks students to compute four or five ratios, compare them, and draw conclusions about trends in liquidity, solvency, or profitability. The mark scheme usually allocates 3-4 marks for correct calculations and 2 marks for analysis and interpretation. Students must present their answers in a structured format: write each ratio as a subheading, show formula and substitution, compute the result for both years, and then write a comparative statement. For instance, 'Current Ratio improved from 1.8:1 in 2023 to 2.2:1 in 2024, indicating enhanced short-term liquidity.' CBSE values students who can explain why a ratio changed — for example, 'the increase in Current Ratio is due to a 25% rise in current assets while current liabilities grew by only 10%, suggesting better working capital management.' Higher-order thinking questions may ask which ratio is more relevant for a creditor versus an investor, or to suggest measures to improve a declining ratio. These three HOTS questions mirror the complexity and multi-step reasoning expected in board exams and competitive assessments.

Q22. From the following information, calculate (i) Current Ratio, (ii) Quick Ratio, (iii) Debt-to-Equity Ratio, (iv) Inventory Turnover Ratio, and (v) Gross Profit Ratio for the year ended 31st March 2024. Current Assets ₹6,00,000 (including Inventory ₹1,50,000 and Prepaid Expenses ₹30,000); Current Liabilities ₹3,00,000; Long-term Debts ₹2,00,000; Shareholders' Funds ₹5,00,000; Cost of Revenue from Operations ₹12,00,000; Average Inventory ₹1,20,000; Revenue from Operations ₹15,00,000. Interpret the overall financial position. (6 marks)
Q23. Compare the liquidity and profitability of two firms A and B using the following data: Firm A — Current Ratio 2.5:1, Quick Ratio 1.5:1, Gross Profit Ratio 30%, Net Profit Ratio 12%; Firm B — Current Ratio 1.8:1, Quick Ratio 1.0:1, Gross Profit Ratio 40%, Net Profit Ratio 8%. Which firm would you prefer as an investor and why? (5 marks)
Q24. The Current Ratio of a company is 3:1 and Quick Ratio is 2:1. The value of Current Liabilities is ₹1,50,000. Calculate the value of Current Assets, Quick Assets, and Inventory. If the company wants to maintain a Quick Ratio of 1.5:1 by paying off creditors, how much should it pay? (6 marks)

Section F: Case Study Question (4 marks)

Case-study questions were introduced in CBSE board exams from 2020-21 to test application of theoretical knowledge in real-world scenarios. A typical case study presents a brief business situation — often a company's financial summary or a management dilemma — followed by four sub-questions, each carrying one mark. For Accounting Ratios, the case might describe a firm facing liquidity issues, declining profitability, or rising debt, and ask students to compute specific ratios, identify problems, and recommend solutions. Read the case carefully, underline key figures, and note any conditions or assumptions stated. Sub-questions usually include one or two MCQs, one calculation, and one interpretation or recommendation. The case study tests not just computational skills but also business acumen — for instance, understanding that a falling Quick Ratio combined with rising Inventory Turnover might indicate aggressive sales at the cost of liquidity. Always refer back to the case data; examiners penalise answers that ignore given information. Write concise, point-form answers unless a detailed explanation is requested. CBSE marking schemes award full credit when the answer is logically derived from the case facts. The case study below integrates liquidity, solvency, activity, and profitability analysis, reflecting the integrated nature of financial statement analysis expected at Class 12 level and in professional accounting courses.

How CBSETUTOR.ai Helps Master Accounting Ratios

Accounting Ratios demand both conceptual clarity and consistent practice with varied numerical problems. Many students struggle to remember formulas under exam pressure or make errors in identifying which balance-sheet items to include in ratio calculations. CBSETUTOR.ai provides a 24×7 AI tutor that guides Class 12 students through every step of ratio analysis. Simply upload a photo of any Accounting Ratios problem from your NCERT exercise, sample paper, or previous year board paper, and the AI tutor delivers a step-by-step solution with explanations of why each formula is used and how to interpret the result. The platform covers all four ratio categories — liquidity, solvency, activity, profitability — and offers instant doubt resolution, so you never get stuck during late-night revision. Unlike generic video lectures, CBSETUTOR.ai adapts to your individual learning pace and focuses on the exact NCERT terminology and CBSE marking scheme expectations. At a flat fee of ₹999 per month for all subjects and classes (6-12), it is more affordable than a single private tuition session in most Indian cities. Parents appreciate the 3-day free trial, which lets students experience the AI tutor's quality before committing. Whether you are in a metro with access to coaching or in a Tier-2 city with limited resources, CBSETUTOR.ai ensures every CBSE student gets expert guidance for Accountancy and every other subject, anytime and anywhere.

Upload any Accounting Ratios problem via photo and receive instant step-by-step solutions aligned with NCERT and CBSE standards
24×7 AI tutor clarifies formulas, identifies which items to include in each ratio, and explains interpretation in simple language
Covers all ratio types: liquidity (Current, Quick, Cash), solvency (Debt-to-Equity, Proprietary, Interest Coverage), activity (Inventory, Debtors, Creditors Turnover), and profitability (Gross, Operating, Net Profit, ROI)
Personalized doubt resolution adapts to individual learning pace, making it ideal for both toppers and students needing extra support
Flat pricing at ₹999/month for every class (6-12) and all subjects; 3-day free trial with no credit card required

Complete Answer Key with Explanations

A worksheet is only as useful as its answer key. This section provides not just the final answer to each question but also the working steps, key formulas, and examiner tips to help students learn from their mistakes. When checking your answers, do not simply tick or cross; read the explanation to understand where you went wrong. If you got a computational question incorrect, identify whether the error was in selecting the wrong formula, a calculation mistake, or incorrect identification of financial statement items. For MCQs, note the reasoning given for the correct option and why the distractors are wrong. For short-answer and long-answer questions, compare your interpretation statements with the model answers; CBSE rewards clarity and correct use of accounting terminology. If you scored below 70% on this worksheet, revisit the NCERT chapter, make summary notes of all formulas, and re-attempt the worksheet after two days. Consistent practice with immediate feedback is the most effective way to master Accounting Ratios and secure high marks in the CBSE Class 12 board exam. Use this answer key as a learning tool, not just a grading rubric. Teachers can refer to the explanations when discussing common errors with students in class revision sessions.

Frequently asked questions

What are the four main categories of Accounting Ratios in CBSE Class 12 Accountancy Chapter 10?+

The four NCERT categories are Liquidity Ratios (Current, Quick, Cash), Solvency Ratios (Debt-to-Equity, Total Assets to Debt, Proprietary, Interest Coverage), Activity Ratios (Inventory, Debtors, Creditors, Working Capital Turnover), and Profitability Ratios (Gross Profit, Operating, Net Profit, Return on Investment). Each category evaluates a different dimension of financial health.

How much time should I spend on this worksheet, and what is the difficulty level?+

Allocate 90 minutes under timed exam conditions. The difficulty is Moderate to Advanced, matching the standard of recent CBSE board papers. Section A and B are relatively straightforward, while Sections D, E, and F require multi-step problem solving and analytical interpretation, reflecting the board exam pattern.

Which ratio formulas are most frequently asked in CBSE Class 12 Accountancy board exams?+

Current Ratio, Quick Ratio, Debt-to-Equity Ratio, Inventory Turnover Ratio, Gross Profit Ratio, Net Profit Ratio, and Return on Investment appear almost every year. Students must know not just the formula but also which items to include (e.g. Quick Assets exclude inventory and prepaid expenses) and how to interpret the computed value.

What is the ideal Current Ratio and Quick Ratio according to NCERT guidelines?+

NCERT suggests an ideal Current Ratio of 2:1, meaning ₹2 of current assets for every ₹1 of current liabilities. The ideal Quick Ratio is 1:1, indicating the firm can meet short-term obligations without selling inventory. However, acceptable ranges vary by industry; CBSE exams reward students who mention this context.

How do I interpret a high Debt-to-Equity Ratio in my answers?+

A high Debt-to-Equity Ratio (e.g. above 2:1) indicates the company relies heavily on borrowed funds, increasing financial risk and interest burden. However, in capital-intensive industries or growth phases, higher leverage may be normal. Always state both the risk implication and the possible justification for full marks in interpretation questions.

Why do we use Average Inventory in Inventory Turnover Ratio instead of closing stock?+

Inventory Turnover Ratio measures how many times inventory is sold and replaced during the year. Since inventory fluctuates, the average (Opening + Closing ÷ 2) gives a more accurate representation of the typical stock level. NCERT and CBSE mark schemes specifically require average for all turnover ratios involving balance-sheet items.

What is the difference between Gross Profit Ratio and Net Profit Ratio?+

Gross Profit Ratio = (Gross Profit ÷ Revenue from Operations) × 100 and measures profit after direct costs but before operating expenses. Net Profit Ratio = (Net Profit after Tax ÷ Revenue from Operations) × 100 and reflects the final profit after all expenses and taxes. Net Profit Ratio is always lower and more relevant to shareholders.

Can I score full marks in long-answer questions even if I make a small calculation error?+

CBSE follows a step-marking scheme. If you write the correct formula, show proper substitution, and your method is sound, you can earn 2-3 out of 5 or 6 marks even if the final answer is wrong due to a calculation slip. Always show complete working and never leave answers without steps.

How does the case study in Section F differ from regular long-answer questions?+

Case studies integrate real-world context and test application skills. Instead of straightforward 'calculate and interpret,' you must read a business scenario, extract relevant data, compute ratios, diagnose problems, and recommend solutions. CBSE awards marks for logical reasoning and practical suggestions, not just computation.

What resources should I use alongside this worksheet for complete Chapter 10 preparation?+

First, solve all NCERT exercise questions and examples. Then use CBSE sample papers and the last five years' board papers for additional practice. Refer to Class 12 Accountancy solutions and notes for quick revision of formulas. For instant doubt clearing and step-by-step photo-based solving, consider CBSETUTOR.ai at ₹999/month with a 3-day free trial covering all subjects from Class 6-12.

Keep learning — related guides

Class 12Accountancy

Class 12 Accountancy Chapter 11 Cash Flow Statement — Formulas & Key Points

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 11 Cash Flow Statement Worksheet with Answers

Class 12Accountancy

Class 12 Accountancy Chapter 8 Financial Statements of a Company — Formulas & Key Points

Class 12Accountancy

Class 12 Accountancy Chapter 10 Accounting Ratios — Formulas & Key Points

Class 12Accountancy

Class 12 Accountancy Chapter 9 Analysis of Financial Statements — Formulas & Key Points

Class 12Accountancy

Important Questions: CBSE Class 12 Accountancy Chapter 10 Accounting Ratios

Ready to give your Class 12 child the tutor that never sleeps?

CBSETUTOR.ai covers every chapter in the Class 12 NCERT syllabus — Maths, Science, Social Science, English, Hindi and more. 24×7. Patient. Unlimited. 3-day free trial.

Start your child's 3-day free trial →