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Question

Advantage(s) of Ratio analysis.

A
Simplifies financial statements
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B
Facilitates inter-firm comparisin
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C
Helps in planning
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D
All the above
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Solution

The correct option is D All the above

The following are the principal advantages of ratio analysis:

1. Forecasting and Planning.

2. Budgeting.

3. Measurement of Operating Efficiency.

4. Communication.

5. Control of Performance and Cost.

6. Inter-firm Comparison.

7. Indication of Liquidity Position.

8. Indication of Long-term Solvency Position.


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