Ratio analysis involves analyzing financial statements to help appraise a firm's financial position and strength.

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Ratio analysis is a type of financial analysis in which financial statements are analyzed to evaluate the financial health and strength of a company. It involves the calculation of various ratios based on financial data such as balance sheets and income statements. These ratios are then compared to industry standards or previous periods to determine the company's financial performance and make decisions about investment or lending.

Ratio Analysis Involves Analyzing Financial Statements to Help Appraise a Firm's