The ratio analysis is an one of the important tools of financial statement analysis to study the financial stature of the business fleeces, corporate houses and so on.
How the ratios are able to facilitate to study the financial status of the enterprise
What is meant by ratio?
The ratio illustrates the relationship between the two related variables
What is meant by the accounting ratio?
The accounting ratios are computed on the basis available accounting information
extracted from the financial statements which are not in a position to reveal the status of
the enterprise.
The accounting ratios are applied to study the relationship between the quantitative
information available and to take decision on the financial performance of the firm
According to J. Betty,
“The term accounting is used to describe relationships
significantly which exist in between figures ratio shown in a balance sheet, Profit
& Loss A/c, Trading A/c, Budgetary control system or in any part of the accounting
organization. ”
According to Myers “Study of relationship among the various financial factors of
the enterprise”

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