Ratio analysis is the tool of Finance. With ratio analysis, we can check our financial position and revenue position. It is very helpful to analyze financial statement. It is also easy to understand and explain interpretations through these ratios. Before discussing different ratios, you should understand the meaning of Ratio. Ratio is the relationship between two or more items of balance sheet or profit and loss account or both statements. For knowing short term position’s strength or liquidity, we can find current ratio, liquid ratio. These ratios tell us what is the amount of current assets , which is in the business if we take the burden of current liabilities. If amount of current assets will more the amount of current liabilities, then our liquidity position will strong. We can also calculate mixed ratios like inventory turnover ratio, debtor turnover ratio,
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