Ratio analysis is the investigation or evaluation of the things included in the company's financial statements.
What Is Ratio Analysis?
- The study or analysis of the line items included in the company's financial accounts is referred to as ratio analysis. It can be used to evaluate a number of business-related aspects, including efficiency, profitability, liquidity, and solvency.
- Since financial statements are the main source of information for external analysts, ratio analysis is mostly carried out by them.
- The analysts heavily rely on the past and present financial statements to gather crucial information for analyzing the company's financial performance. It is possible to tell whether a company's financial situation is getting better or worse using the data or information gathered during the analysis.
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