A K JHA INTRODUCTION Prepared after preparation of Financial Statements Prepared for better understanding of Financial Statements Helps understand fiscal position of the company Ratio analysis is one of the analytical tool to find out the performance of a business venture ID: 1027690
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1. Ratio AnalysisFinancial Management and Financial Accounting (DBM-422)A K JHA
2. INTRODUCTIONPrepared after preparation of Financial StatementsPrepared for better understanding of Financial StatementsHelps understand fiscal position of the companyRatio analysis is one of the analytical tool to find out the performance of a business venture.
3. These ratios have been classified as measuring (1) Liquidity (current ratio, acid-test ratio, etc.) (2) Activity (receivables turnover, inventory turnover, etc.) (3) Profitability (profit margin on sales, rate of return on assets, earnings per share, etc.) and (4) Leverage (debt to total assets, times interest earned, etc.).It is the
4. Ratio analysis is done to see various financial implications of business transactions.It is done to analyse the performance of the business.
5. TYPES OF FINANCIAL RATIOSThere are two approachesClassical approachRatios are classified on the basis of the accounting statement from where they are obtainedFunctional classification based on the use and purpose
6. Traditional Classification has three typesProfit and Loss RatiosBalance Sheet RatiosComposite Ratios