Ratio analysis compares line item data in a company’s financial statements to provide insights into profitability, liquidity, operational efficiency, and cost. Ratio analysis can indicate a company’s performance over time and compare a company to other companies in the same industry or sector.
Accounting Grade 11 Class Test on Ratio analysis and interpretation, with memorandum included. Grade 11 Accounting Students should know that ratio analysis means comparing line-item data from a company’s financial statements to reveal insights regarding:
- profitability,
- liquidity,
- operational efficiency, and
- solvency.