Question

Role of ratio analysis in the interpretation of financial statements

Answer 1

Explanation:

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by comparing information contained in its financial statements. Ratio analysis is a cornerstone of fundamental analysis.

Outside analysts use several types of ratios to assess companies, while corporate insiders rely on them less because of their access to more detailed operational data about a company.

When investors and analysts talk about fundamental or quantitative analysis, they are usually referring to ratio analysis. Ratio analysis involves evaluating the performance and financial health of a company by using data from the current and historical financial statements.

Answer 2

The ratio analysis is used to maintain the financial statements

Explanation:

• Ratio analysis is used to analyze the aspects of a company's operational and financial performance.

• These include efficiency, liquidity, and probability these ratios thus keep a check on the companies performance over time.

• Ratio analysis is used to evaluate the number of issues within a business entity.  

• The analysis of a financial statement consists of the identification of the key economic characteristics, companies strategies, access the quality, and current profitability. They help to prepare forecasts and value the firms.

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• brainly.in/question/10290403 answered by daraharshini9.