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Trend Analysis

Trend Analysis Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of a firm is improving or deteriorating over the years. This is made possible by the use of trend analysis. The significance...

Inter-firm Comparison

Inter-firm Comparison Ratio analysis not only throws light on the financial position of a fum but also serves as a stepping stone to remedial measures, This is made possible due to inter-firm comparison and comparison with industry averages. A single figure of a...

Overall Profitability

Overall Profitability Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the overall profitability of the enterprise. That is, they are concerned about the ability of the firm...

Operating Efficiency

Operating Efficiency Yet another dimension of the usefulness of the ratio analysis, relevant from the viewpoint of management, is that it throws light on the degree of efficiency in the management and utilization of its assets. The various activity ratios measure this...

Long-term Solvency

Long-term Solvency Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This aspect of the financial position of a borrower is of concern to the long-term creditors, security analysis and the present and potential owners of a...

Liquidity Position

Liquidity Position With the help of ratio analysis conclusions can be drawn regarding the liquidity position of a firm. The liquidity position of a firm would he satisfactory if it is able to meet its current obligations when they become due. It firm can be said to...