Understanding Accounting Ratios for Financial Analysis(Ratio Analysis PPT)

Accounting ratios, also known as financial ratios, are used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another, and are the basis of ratio analysis. In simple words, it is an assessment of significance of any figure in relation to another. An accounting ratio compares two-line items in a company’s financial statements, namely made up of its income statement, balance sheet and cash flow statement.