The four types of financial ratios used in ratio analysis help an accountant to
A) manage annual cash flow.
B) verify current cash balance.
C) account for accrued depreciation.
D) ensure an accurate trial balance.
E) compare performance with similar firms.

Question

Quizplus · Accepted Answer

Financial ratios are primarily used for comparison purposes, allowing accountants and analysts to compare a company's financial performance with that of similar firms in the same industry. This helps in assessing the company's competitive position and financial health.

The Four Types of Financial Ratios Used in Ratio Analysis