Accounting Ratios 5

Financial statements aim at providing financialinformation about a business enterprise to meetthe information needs of the statements prepared by a businessenterprise in the corporate sector are published andare available to the decision-makers. Thesestatements provide financial data which requireanalysis, comparison and interpretation for takingdecision by the external as well as internal users ofaccounting information. This act is termed asfinancial statement analysis . It is regarded as anintegral and important part of Accounting . Asindicated in the previous chapter, the mostcommonly used techniques of financial statementsanalysis are comparative statements, common sizestatements, trend analysis , Accounting Ratios andcash flow analysis .

profitability of the enterprises. 5.1 Meaning of Accounting Ratios As stated earlier , accounting ratios ar e an important tool of financial statements analysis. A ratio is a ... 5.4 Limitations of Ratio Analysis Since the ratios are derived from the financial statements, any weakness in the

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  Analysis, Ratios, Profitability, Limitations, Ratio analysis

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