Beautiful Explain The Meaning Of Ratio Analysis
A ratio is a statistical yardstick that provides a measure of the relationship between two variables or figures.
Explain the meaning of ratio analysis. What Is Ratio Analysis. Ratio analysis is the process of determining and presenting in arithmetical terms the relationship between figures and groups of figures drawn from these statements. Ratio analysis is a quantitative method of gaining insight into a companys liquidity operational efficiency and profitability by studying its financial statements such as.
It is simply an expression of one number in terms of another. It may also be defined as the relationship or proportion that one amount bears to another the first number being the numerator and the later denominator. It can be used to check various factors of a business such as profitability liquidity solvency and efficiency of the company or the business.
Definition of Financial Ratio Analysis. Ratio analysis is referred to as the study or analysis of the line items present in the financial statements of the company. They are a comparison of two numbers with respect to each other.
Similarly in finance ratios are a correlation between two numbers or rather two accounts. Meaning of Ratio Analysis Now we have previously learned what ratios are. A ratio expresses simply in one number the result of a comparison between two figures.