Concept
How can ratio analysis identify a firm’s financial strengths and weaknesses?
IntroductionToBusiness OP 8D04gAa / Preparing for Tomorrow's Workplace Skills
"14.7 Analyzing Financial Statements 7. How can ratio analysis be used to identify a firm’s financial strengths and weaknesses? Ratio analysis is a way to use financial statements to gain insight into a firm’s operations, profitability, and overall financial condition. The four main types of ratios are liquidity ratios, profitability ratios, activity ratios, and debt ratios. Comparing a firm’s ratios over several years and comparing them to ratios of other firms in the same industry or to industry averages can indicate trends and highlight financial strengths and weaknesses."
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