0
Rate this Study Guide:
☆☆☆☆☆it refers to the assessment of financial statements of a company to make decisions regarding performance and financial position. it covers various areas of a company, like profitability, liquidity, solvency, and market value.
there are basically five types of ratio analysis. they are:
it is an assessment of profit that is earned by a company. companies which earn higher profit tend to have better market share.
this is an assessment of how much cash a company has. liquid companies can pay off obligations faster than less liquid companies.
it is an analysis of leverage of a company. it also shows whether a company is funded by debt or by equity. debt funded companies are riskier compared to equity funded companies.
this is an assessment of whether assets of a company can contribute to earning profit. higher ratios imply higher asset efficiency.
it is an analysis of market value of a company. companies with high market value have better investment potential compared to those with less market value.
