1. Introduction to Ratio Analysis Ratio analysis is a widely used tool of financial analysis. It is defined as the systemic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition, can be determined. Ratios make the related information comparable. A single figure [...]
In this article we will discuss about the classification and computation of ratios. Classification of Ratios: Ratios may be classified from various stand points and they are: (A) Classification by Statements: This classification is based on those statements from which information’s are obtained for calculating ratios since accounting information’s are obtained mostly from two statements i.e. Balance Sheet and Profit [...]