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Q.

Tally: What is use of Ratio Analysis and when it will be useful?

Asked by Shikha, 02 Jun '08 12:52 pm
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1.

Ratio Analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.
There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity, financing and liquidity. Some common ratios include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and working capital.
Study undertaken by financial statement preparers and users to evaluate the financial strength or weakness of a company and its operating trend. Various ratios are computed, depending upon the objective of the user analyzing the financial statements. Short-term creditors are primarily concerned with a company's ability to meet ...more
Answered by GOPI KUMAR, 02 Jun '08 12:56 pm

 
  
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useful in Project finance & analysis
Answered by Gurdeep Chawla, 02 Jun '08 01:11 pm

 
  
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