RATIO ANALYSIS- MEANING IMPORTANCE OF RATIO ANALYSIS Ratio Analysis is a important and useful technique of financial analysis. Helps in judging the financial soundness of an enterprise. One of the best tools available to financial analyst. Helps in making a relative study, presenting data in a concise form. ADVANTAGE OF RATIO ANALYSIS Useful in analyzing the financial statement Useful in judging the operating efficiency Useful in expressing trends Useful in simplifying accounting figures Helps in depicting changes Helps in locating weak spots of the business Helps in comparison Effective control Ignores price level changes No single standard ratio May give false result based on incorrect data Ignores qualitative factors Different meanings to different terms

1. TRINITY INSTITUTE OF PROFESSIONAL
STUDIESSector – 9, DwarkaInstitutional Area, New Delhi-75
Affiliated Institution of G.G.S.IP.U, Delhi
RATIO ANALYSIS
BBA (GENERAL) III SEM

2. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
RATIO ANALYSIS- MEANING
• Ratio means one figure expressed in terms of
another.
• It is an expression of relationship between
two or more mutually interdependent figures.
• Accounting Ratios describe the important
relationship that exists between figures
shown in profit & loss account and balance
sheet.

3. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
IMPORTANCE OF RATIO ANALYSIS
• Ratio Analysis is a important and useful
technique of financial analysis.
• Helps in judging the financial soundness of an
enterprise.
• One of the best tools available to financial
analyst.
• Helps in making a relative study, presenting
data in a concise form.

4. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
ADVANTAGE OF RATIO ANALYSIS

5. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
LIMITATIONS OF RATIO ANALYSIS

6. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
CLASSIFICATION OF RATIOS

7. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
LIQUIDITY RATIOS

8. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
PROFITABILITY RATIO

9. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
TURNOVER RATIOS

10. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, DwarkaInstitutional Area, New Delhi-75
DEBT-EQUITY RATIO