Archive | Ratio Analysis

Ratio Analysis: Steps and Nature | Accounting

In this article we will discuss about:- 1. Introduction to Ratio Analysis 2. Steps in Ratio Analysis 3. Nature. Introduction to Ratio Analysis: The company’s financial information is contained in Balance Sheet and Profit and Loss Account. The figures contained in these statements are absolute and sometimes unconnected with one another. An absolute figure does […]

Users of Ratio Analysis | Accounting

In this article we will discuss about the users of ratio analysis in accounting. Ratio analysis of a firm’s financial statements is of interest to a number of parties, mainly, share-holders, creditors, debtors, firm’s own management etc. People in various walks of life are at present interested in ratio analysis though in different ways and […]

9 Major Limitations of Ratio Analysis

The following points highlight the nine major limitations of ratio analysis. The limitations are: 1. False Results if Based on Incorrect Accounting Data 2. No Idea of Probable Happenings in Future 3. Variation in Accounting Methods 4. Price Level Changes 5. Only One Method of Analysis 6. No Common Standards 7. Different Meanings Assigned to […]

5 Main Types of Ratio Analysis

The following points highlight the five main types of ratio analysis. The types are: 1. Profitability Ratios 2. Coverage Ratios 3. Turnover Ratios 4. Financial Ratios 5. Control Ratios. Ratio Analysis: Type # 1. Profitability Ratios: Profitability ratios are of utmost importance for a concern. These ratios are calculated to enlighten the end results of […]

Accounting Ratios: Uses and Types (With Calculations)

In this article we will discuss about Accounting Ratios:- 1. Uses of Accounting Ratios 2. Types of Accounting Ratios. Uses of Accounting Ratios: Some of the possible uses of accounting ratios are summarized below: 1. Accounting ratios may be very useful for forecasting likely events in the future since past ratios indicate trends in costs, […]

Ratio Analysis: Definition and Limitations | Cost Accountancy

In this article we will discuss about Ratio Analysis:- 1. Definition of Ratio Analysis 2. Limitations of Ratio Analysis. Definition of Ratio Analysis: Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as “the indicated quotient of two mathematical expressions and as the relationship between two or mm thing?” — Webster’s […]

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