Review Questions

  1. What is meant by financial statements analysis? Discuss.
  2. Why are financial ratios considered an important technique of ­financial statement analysis?
  3. How are financial ratios classified? Discuss the different types of financial ratios.
  4. “Financial ratios are not free from limitations.” What are the various limitations of financial ratios?
  5. “There is no universal definition of financial ratios.” How far is it correct?
  6. “Financial ratios are historical in nature.” Explain.
  7. “The use of financial ratios changes with the country of application.” Do you agree?
  8. “Profitability ratios are used to analyze the profit capacity of the firm at different levels.” Explain.
  9. Discuss the various margin ratios and return ratios of profitability. ...

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