Question

Advantage of accounting ratios in the analysis of financial statements

Answer 1

Advantage of accounting ratios

1)  It simplifies the financial statements.
2)  It helps in comparing companies of different size with each other.
3)  It helps in trend analysis which involves comparing a single company over a period.
4)  It highlights important information in simple form quickly. A user can judge a company by just looking at few numbers instead of reading the whole financial statements.