Accounting Ratios

Accounting ratios assist in the interpretation of financial performance of an entity. Information such as business solvency, its profitability, the return on its assets, its ability to meet short-term and long-term liabilities et cetra, is vital in gauging a business’ health and its commercial vialbility. Such information is vital for all the stakeholders, that is shareholders, potential investors, the management, creditors, guarantors and statutory/regulatory bodies.

Financial statement analysis/accounting ratios can be divided into following categories:

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