A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:
A)creating the pro forma.
B)budgeting.
C)break-even analysis.
D)ratio analysis.

Question

Quizplus · Accepted Answer

Ratio analysis is a technique that helps in understanding the financial health of a business by analyzing the relationship between two accounting elements such as liquidity, profitability, efficiency, and solvency ratios. This technique helps small business owners to make informed decisions about their business operations and performance. A pro forma is a financial statement that projects future financial performance, budgeting involves creating a plan for future financial activities, and break-even analysis is a method for determining the minimum amount of sales needed to cover expenses.

A Technique That Allows the Small Business Owner to Perform