Question

Why accounting ratios are calculated????​

Answer 1

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To make the items comparable for use in activity ratios, an average figure is calculated for the balance sheet data using the beginning and ending reported numbers for the period (quarter or year). The activity ratios measure the rate at which the company is turning over its assets or liabilities.

Answer 2

Explanation:

most commonly used financial statements—the income statement, balance sheet and cash flow statement.

In this installment of the series, I take an in-depth look at the most commonly used financial ratios. Click here for a downloadable spreadsheet that automatically calculates these ratios using financial statement inputs that you provide. Click here for detailed explanations on creating the ratios for Stock Investor Pro users.