On completion of the study of the chapter, you should be able to understand:
- What is Accounting Ratio?
- What is meant by Ratio Analysis?
- Importance, uses, advantages and limitations of Ratio Analysis.
- Structural Analysis of Financial Statements for the purpose of computation of different Ratios.
- Classification of Ratios on the basis of their sources.
- Computation of different Ratios from Financial Statements.
- Uses of various Ratios to analyse liquidity, solvency, profitability, Capital Structure, activity and the overall performance of an enterprise.
- How Ratios are applied to interpret Financial Statements of an enterprise.
- Du Pont Analysis of Financial Statements.