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Comparative Balance Sheet

Ratio analysi...

Question

Ratio analysis provides users with crucial financial information and points out the area which require ______.

A

Investigation

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B

Finalization

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C

Classification

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D

Automation

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Solution

The correct option is A Investigation
Ratio analysis reflects the firm's performance in relation to its competitors. It involves comparison of a firm over a period of time, that is, present ratios are compared with past ratios. It indicates the area of investigation i.e. change in the performance, improvements, deterioration etc.

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