Ratio analysis is a powerful tool of financial analysis. In ratio analysis, a ratio is used as a bench marking for evaluating the financial position and performance of the firm. Ratio helps to summarize large quantities of financial data and make quantitative judgment about the firm financial performance. The ratio analysis involves the comparison for a useful interpretation of the financial statements. The techniques of ratio analysis can be employed for measuring short term liquidity or the working capital position of a firm. The following ratios may be calculated for this purpose. A ratio is the relationship between two or more things. It indicates quotient of two mathematical expressions. It is calculated by dividing one onto the other. Ratios may also be expressed as percentages, by multiplying the quotient with 100. A ratio is used as a benchmark for evaluating the financial position and performance of different firms. It is also used to compare one firm with other in all the performance and can improvements in decision making, forecasting, managerial control, facilitating investment decisions, and also useful in measuring financial solvency of a firm.
by K. Sirisha | Dr. P. Basaiah "A Study on Ratio Analysis"
Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-5 , August 2020,
URL: https://www.ijtsrd.com/papers/ijtsrd33144.pdf
Paper Url :https://www.ijtsrd.com/management/accounting-and-finance/33144/a-study-on-ratio-analysis/k-sirisha
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