FINANCE

Finance

Finance

Importance of Ratios

Question 1: Discuss the importance of ratios, what do they tell us, how they are calculated. Why is it necessary to compare ratios within an industry?

Ratio investigation does two things, immediately. The first thing is it permits the business to contrast itself with other like companies. If administration feels things aren't going well, they can help pinpoint the difficulty through matching their ratios with other companies. They may have some ratios that are comparable, but a twosome which are way off. That might be where the difficulty is (Weston, 1972). Financial ratios are helpful signs of a firm's ...