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Other
ratios and percentages: Ratio analysis is a useful tool of for both micro and macro financial appraisal. Like all other analytical tools, its usefulness depends on the user and the purpose. There are no standard ratios applicable to all purposes and situations. Certain ratios are more useful at micro level and others at macro level. Broadly, ratios represent a relation between two variables chosen and the type of relation set out has to be seen for a particular purpose. Any number of such ratios can be designed depending upon the purpose of the analysis. In isolation, ratios can be used only for time-series analysis of the company' performance. In such an analysis, continuing inefficiencies built into the system of a corporate escape observation. Very important factors in ratio analysis, therefore, are benchmarking and cross-sectional analysis. With the availability of commercial databases in the market these tools can also be used to accurately analyse the performance of a corporate. Ratio analysis, therefore, should be applied, not in isolation but with reference to a group of companies within an industry to ascertain its financial viability, and other relevant factors. This same tool can also be used at the time of taking investment decisions.
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