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Question : Which of the following is not the Objective of Ratio Analysis?

Option 1: To identify the areas of the business that require more attention

Option 2:

Not provide data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry

Option 3:

To give a more thorough study of the business's liquidity, solvency, activity, and profitability

Option 4: To provide data that will be beneficial for estimating and creating future strategies


Team Careers360 20th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer:

Not provide data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry


Solution : Objectives of Ratio Analysis:

(i) To identify the areas of the business that require more attention.

(ii) To give a more thorough study of the business's liquidity, solvency, activity, and profitability.

(iii) It provides the data for cross-sectional analysis,  for comparison with some chosen enterprises in the same industry.

(iv)To provide data that will be beneficial for estimating and creating future strategies.
Hence, the correct option is 2.

 

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