Financial Ratios are mathematical assessments of financial statement accounts. Financial Ratio Analysis is performed by comparing two items in the financial statements. The resulting ratio can be interpreted in a way that is not possible when interpreting the items alone. In simple words, we are analyzing interrelationships.
The Proprietory of an organization don't have enough time to read the lengthy numeric financial statements (profit loss & balance sheet) and it takes a lot of their time to understand and analyzed the whole financial statements so they always preferred Financial Ratio Analysis to keep an eye on their business' financial position.
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what is ratio analysis
scope of ratio analysis
What ratio or other financial statement analysis technique will you adopt for this.
One of the main benefits of financial ratio analysis is that it simplifies financial statements. Another advantage is that vital information is easily highlighted.
Financial ratio analysis would be performed by a qualified analyst who would offer a report to investors that would suggest buying, selling or for the investor to hold on to security based on the analysts research and final written report.
Importance of financial ratio analysis on investment decision making?
The evaluation of financial data may be performed through ratio analysis, trend evaluation, and financial planning modeling. Financial planning and forecasting are facilitated if used in conjunction with a Decision Support System (DSS).
Ratio analysis shows how a company performed at a given time. Trend analysis shows how a company performed over time and whether the company has done better, worse, or stayed the same.
The evaluation of financial data may be performed through ratio analysis, trend evaluation, and financial planning modeling. Financial planning and forecasting are facilitated if used in conjunction with a Decision Support System (DSS).
1.Commansize Balence sheet analysis 2.Comparative Balence sheet analysis 3.Trend analysis 4.Ratio Analysis
ratio analysis
discuss objective and limitation of time series analysis