Accounting Principles V11

Clive W. Humphris

RATIO: Ratio.    

A ratio is measure of the relationship between the fractional parts of a whole. It is a way of comparing quantities. If the ingredients of a cake are all doubled and their ratio remains the same it's reasonable to expect the weight of the cake to double.

To convert numbers expressed as a ratio, first add them together and write as fractions of the total. This makes the actual values easier to read. The sum of the fractions will always equal one or the whole.

Values written as ratios can often be made more meaningful through cancelling. For example 15 : 25 : 35. As each figure is divisible by 5 this can be written as 3 : 5 : 7 the relationship between the values remains unchanged.

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