Uses of ratio analysis:
- The relation between 2 or more financial data brought out by an accounting ratio is not an end in itself. They are means to get to know the financial position of an organization.
- Industrial ratios may provide valuable information only when they are studied and compared with several other related ratios.
- Ratio analysis will tend to be more meaningful when certain standards and norms are laid down so that what the ratios indicate can be compared with the said standards.
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