The National Directory of Certified Public Accountants

Ask A CPA - Buying & Selling a Business

What Is Ratio Analysis As It Relates To Financial Statements ?

Financial statements provide a starting point for understanding a company. Ratio analysis is another tool to monitor a companys condition. It involves the methods of calculating and interpreting financial ratios to assess the companies performance and status. Each industry has its own different acceptable levels for its ratios. It is hard to interpret ratios properly without using industry averages.

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