Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

Technique of ratio analysis helps in:

Options:

Assess the profitability

Assess the solvency

Assess the efficiency of an enterprise

All of the Above

Correct Answer:

All of the Above

Explanation:

Ratio Analysis: It describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm. As a technique of financial analysis, accounting ratios measure the comparative significance of the individual items of the income and position statements. It is possible to assess the profitability, solvency and efficiency of an enterprise through the technique of ratio analysis.