Accounting Ratios

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 . The first three have beendiscussed in detail in the previous chapter.

profitability of the enterprises. 5.1 Meaning of Accounting Ratios As stated earlier, accounting ratios are 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, Accounting, Ratios, Profitability, Limitations, Ratio analysis, Accounting ratios

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