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What are the Benefits of financial ratio analysis?
One of the main benefits of financial ratio analysis is that it simplifies financial statements. Another advantage is that vital information is easily highlighted.
Which financial ratio is the best measure of the operating effectiveness of a firms management?
current ratio
Ratio in isolation provide into the financial performance and financial position?
rations in isolation reveal little about financial position and financial performance of business.
Why accounting is called the language of business?
Because it communicates financial information, accounting is often called "the language of business." The information that a user of financial information needs depends upon the kinds of of decisions the user makers. The differences in the decisions divide the users of financial information into two broad groups: internal users and external users.
What quick ratio indicates?
Quick ratio indicates company's liquidity and ability to meet its financial liabilities. Formula of quick ratio = (Current assets - Inventory)/Current Liabilities
What level of knowledge should users of financial statements have?
What level of knowledge should users of financial statements have?
What is ratio analysis and importance of ratio analysis in financial management?
what is ratio analysis
What are the scopes of financial ratio analysis?
scope of ratio analysis
What are the Benefits of financial ratio analysis?
One of the main benefits of financial ratio analysis is that it simplifies financial statements. Another advantage is that vital information is easily highlighted.
What is accounting importance of that?
Who are users of financial statements
Which type of financial ratio statement is used to judge how well an organization will be able to meet its short term financial obligations?
quick ratio
The basic objective of financial accounting is to?
provide quantitative information to users of financial positition.
What are the merits and demerits of ratio analysis?
Financial ratio analysis is a useful tool for users of financial statement. It has following advantages:AdvantagesIt simplifies the financial statements.It helps in comparing companies of different size with each other.It helps in trend analysis which involves comparing a single company over a period.It highlights important information in simple form quickly. A user can judge a company by just looking at few numbers instead of reading the whole financial statements.LimitationsDespite usefulness, financial ratio analysis has some disadvantages. Some key demerits of financial ratio analysis are: Different companies operate in different industries each having different environmental conditions such as regulation, market structure, etc. Such factors are so significant that a comparison of two companies from different industries might be misleading.Financial accounting information is affected by estimates and assumptions. Accounting standards allow different accounting policies, which impairs comparability and hence ratio analysis is less useful in such situations.Ratio analysis explains relationships between past information while users are more concerned about current and future information.
What ratio or other financial statement analysis technique will you adopt for analysis of liquidity of a firm?
What ratio or other financial statement analysis technique will you adopt for this.
Who are the primary users of financial accounting information?
creditors
Which financial ratio is the best measure of the operating effectiveness of a firms management?
current ratio
Ratio in isolation provide into the financial performance and financial position?
rations in isolation reveal little about financial position and financial performance of business.
