Archive | Ratio Analysis

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 […]

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 […]

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, […]

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