Ratio and Proportion Formulas and Examples

The first one is the Current ratio which let us know the short term solvency of any firm. Moreover, its use is widespread in many industries, including banking, accounting, ratio formulas and finance. Banks use ratios to assess the creditworthiness of borrowers, while investors use ratios to evaluate the potential returns on investment.

In this article, the students get a clear vision of these two concepts with more solved examples and problems. If you have a low ratio, consider ways you can improve your accounts receivable processes and efficiency. This could include implementing better policies for handling late payments, or adding automation to your AR process to speed up the steps needed.

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Formula

We define ratio as the comparison between two quantities such that it tells us how much of one quantity is present in the other quantity. Both the numbers should be non-zero in order to make meaning out of the comparison. In order to find the value of y, we have to use the ratio formula. Here, ‘a’ and ‘b’ are two different quantities with the same unit.

• A strong customer relationship can create a high-quality customer base, improve customer satisfaction, and incentivize repurchasing.
• Implementing automation into your AR process can save you time and effort in collecting payments.
• We need to express both in their lowest terms by finding their HCF and dividing both antecedent and consequent by their corresponding HCF.
• The first one is the Current ratio which let us know the short term solvency of any firm.
• The above concepts will help to find an unknown term if the two ratios that are in proportion are given.

A ratio table is a list containing the equivalent ratios of any given ratio in an ordered form. It is prepared by finding the equivalent ratios of any given ratio. Maths ratio and proportion are used to solve many real-world problems.

Solved Examples on Ratio Formula

Based on the given information, calculate the liquidity, solvency, efficiency, and profitability ratios of Apple Inc. for the year 2022. A company can perform ratio analysis over time to get a better understanding of the trajectory of its company. Performing ratio analysis is a central part in forming long-term decisions and strategic planning. The fundamental basis of ratio analysis is to compare multiple figures and derive a calculated value.