With appropriate calculation and interpretation, ratioanalysis can provide information about the situationof a business, including liquidity, solvency andprofitability.The analysis is used to provide indicators of pastperformance by employing critical success factors ina business.As a decision-making tool, ratio analysis reducesreliance on intuitive guessing and established abasis for sound judgment.16
16 ⚫ With appropriate calculation and interpretation, ratio analysis can provide information about the situation of a business, including liquidity, solvency and profitability. ⚫ The analysis is used to provide indicators of past performance by employing critical success factors in a business. ⚫ As a decision-making tool, ratio analysis reduces reliance on intuitive guessing and established a basis for sound judgment
ProfitabilityLiquiditySolvencyBasicapproachesof ratioanalysis17
17 Liquidity Solvency Profitability Basic approaches of ratio analysis