Uses of ratio analysis:

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  1. 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.

 

  1. Industrial ratios may provide valuable information only when they are studied and compared with several other related ratios.

 

  1. 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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