What is meant by Ratio analysis

Answer Posted / babhu kanchupalli(dms)

Ratio stands for arthimatical expression of two variables.

Ratio analysis : It is a process of finding strengths and weaknesses of business firm by properly establishing the relationship between profit & loss account and balance sheet items i.e financial statements.
For example :

current ratio= Current assets/current ratios
It reflects the availability of current assets to meet it's current liabilities

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