Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:
Which technique involves regrouping of data by application of arithmetical relationships, though its interpretation is a complex matter?
Options:
Comparative analysis
Ratio analysis
Trend analysis
All of these
Correct Answer:
Ratio analysis
Explanation:
Ratio analysis is a technique which involves regrouping of data by application of arithmetical relationships, though its interpretation is a complex matter. It requires a fine understanding of the way and the rules used for preparing financial statements. Once done effectively, it provides a lot of information which helps the analyst.