What are accounting ratios? When is it useful?

Question

Accepted Answer

Accounting ratios are financial metrics used to analyze and evaluate a company's financial performance.

Accounting ratios are calculated by comparing different financial figures from a company's financial statements.
They provide insights into a company's liquidity, profitability, efficiency, and solvency.
Examples of accounting ratios include the current ratio, return on equity, gross profit margin, and debt-to-equity ratio.
These ratios are useful for investors, creditors, and management to assess the financial health and performance of a company.
They help in making informed decisions, identifying trends, comparing performance with industry benchmarks, and evaluating the effectiveness of financial strategies.

Accepted Answer

The ratios can be used to evaluate the financial condition of a company, including the company's strengths and weaknesses.It help the company to select the best policy .

What are accounting ratios? When is it useful?

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