Explain the term Using Ratios to Make Business Decisions?
There is lots of information in the financial reports summed up in numbers. We might not have sufficient knowledge of the detailing substance’s practicality introduced on a superficial level. In this manner, the mass of reality contained in it must be estimated by methods for financial proportions, and enhance decision-making.
Ratio analysis assists to recognize the essential features of the financial statements, analyze them, and interpret them. When added to a series of financial statements, financial ratios emphasize the essential features of a firm's financial condition and operating results that require additional inquiries. We help identify a company's strengths and weaknesses.
Ratio analysis generally supports to assess a company's past results, current condition, and potential prospects. This encourages us to ask the correct company questions and paves the way for practical responses. Therefore, this study helps to aids planning, control, forecasting, and decision- making.
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