Assertion :Ratio analysis is one of the tools employed to know the financial health of a concern. Reason: Ratio analysis is not the only technique available to take investment decision.

Both Assertion and Reason are correct and Reason is the correct explanation for Assertion.

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Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion.

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Assertion is correct but Reason is incorrect.

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Assertion is incorrect but Reason is correct.

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Solution

The correct option is B Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion.
Ratio Analysis is one of the tools employed to know the financial health of a concern due to the following reasons:
It helps in identifying problem areas.
It enables Intra-firm and Inter -firm analysis.
It helps in assessing the long-term solvency of the business.
It helps in analyzing the liquidity position of the companies.

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