Ratios are used as tools in financial analysis

Question

Quizplus · Accepted Answer

Ratios are useful because they can provide insights and reveal trends that may not be visible just by looking at the individual components of financial statements. They allow for comparisons across time periods and among different companies. While single ratios may be meaningful on their own, more comprehensive analysis usually requires examining multiple ratios together. GAAP does not prescribe specific ratios to be used in analyzing financial statements.

Ratios Are Used as Tools in Financial Analysis