Mid Term File

1 Advantages of Ratios Analysis: Ratio analysis is an important and old-fashioned technique of financial analysis. The following be some of the advantages of symmetry analysis: 1. Simplifies financial statements: It simplifies the comprehension of financial statements. Ratios tell the undivided story of changes in the financial condition of the business 2. Facilitates inter-firm equation: It provides data for inter-firm proportion. Ratios highlight the factors associated with with successful and unsuccessful firm. They also set off strong firms and weak firms, overvalued and undervalued firms. 3. Helps in mean: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting. Planning, co-ordination, control and communications. 4. Makes inter-firm comparison possible: Ratios analysis also makes possible comparison of the carrying out of different divisions of the firm. The ratios ar helpful in deciding about(predicate) their efficiency or otherwise in the past and liable(predicate) performance in the future. 5. Help in investment decisions: It helps in investment decisions in the lawsuit of investors and lending decisions in the case of bankers etc.

2 Limitations of Ratios Analysis: The ratios analysis is one of the most strong tools of financial management. Though ratios are simple to calculate and well-fixed to understand, they suffer from serious limitations. 1. Limitations of financial statements: Ratios are based save on the information which has been recorded in the financial statements. monetary statements themselves are subject to several limitations. Thus ratios derived, there from, are also subject to those limitations. For example, non-financial changes though important for the business are not relevant by the financial statements. Financial statements are affected to a very great extent by accounting conventions and concepts. Personal judgment plays a great transgress in determining the figures for financial... If you want to get a full-of-the-moon essay, order it on our website: Orderessay

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