“In spite of its limitations ratio analysis is widely used as a means of evaluating the past performance and predicting the future successes or failures of business organisations.”
Ratio analysis isn't just picking different numbers from the balance sheet, income statement, and cash flow statement and comparing them. Ratios compare facts against previous years, the industry, other companies, or even the economy in general. Ratios look at the relationships between values and relate them to find out how a company has performed in the times of yore and might perform in the future. The echelon and chronological trends of these ratios can be used to make inferences about a company's financial condition, its operations as well as the attractiveness as an investment. Financial ratios are calculated from one or more pieces of information from a company's financial statements. They investigate thoroughly the financial condition of a business and can assist in making a decision about......
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