Aim:
To test the significant relationship between the accounting ratios of operating management and standard ideal ratios.
Null Hypothesis(H_{0}) :
There is no significant relationship between the accounting ratios of operating management and standard ideal ratios.
Alternative Hypothesis(H_{1}) :
There is a significant relationship between the accounting ratios of operating management and standard ideal ratios.
Table: Calculation of correlation co-efficient between the accounting ratios of operating management and standard ideal ratios of X ltd.
Financial accounting ratios
Karl's Pearson's co-efficient of correlation
Calculated value(t)
Table value
Significant/Not significant
Fixed assets turnover ratio
0.75
2.27
Return on investment
Gross profit ratio
Return on total assets
Return on networth
Return on net assets