For meaningful analysis, ratios should be compared with a standard.

Question

Quizplus · Accepted Answer

Ratios are used to compare two quantities or values. To make meaningful analysis, it is important to compare ratios with a standard, such as industry standards, competitor benchmarks, or historical data, to determine the business's performance, strengths, and weaknesses. Without a standard, ratios may not provide relevant insights and may mislead decision-making processes. Therefore, comparing ratios with a standard is critical to ensure accurate analysis and informed decision-making.

For Meaningful Analysis, Ratios Should Be Compared with a Standard