Advantage(s) of Ratio analysis.

Simplifies financial statements

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Facilitates inter-firm comparisin

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Helps in planning

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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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State any three advantages and three limitations of analysis of financial statements.

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