Explain the purpose of financial ratio analysis and why a careful reading of the financial statements is not enough.

      

Explain the purpose of financial ratio analysis and why a careful reading of the financial statements is not enough.

  

Answers


Kavungya
• Ratios help in determining the liquidity levels of the firm
• Necessary for determining the gearing level of the firm
• They determine in determining the performance of the firm in terms of profitability and even try to make comparisons with other firms in the same industry.
• Help in determining the turnover of stocks.
Kavungya answered the question on May 5, 2022 at 09:58


Next: Highlight three problems that could be faced by a firm with a high gearing level.
Previous: The following statement of financial position relates to Mageuzi Ltd. as a t 31 December 2009.

View More CPA Financial Management Questions and Answers | Return to Questions Index


Exams With Marking Schemes

Related Questions