Question : Which of the following is not the objective of Ratio Analysis?
Option 1: Calculate profit and loss of the business
Option 2: To provide deeper analysis of the liquidity, solvency, activity and profitability of the business.
Option 3: To provide information for making time-series analysis, i.e., for making comparison of a firm’s present ratios with its past ratios.
Option 4: To provide information useful for making estimates and preparing the plans for the future
Correct Answer: Calculate profit and loss of the business
Solution : Answer = Calculate the profit and loss of the business.
The objective "Calculate profit and loss of the business" is not a primary objective of ratio analysis. Instead, ratio analysis focuses on assessing liquidity, solvency, activity, and profitability, facilitating time-series analysis, and providing information for future estimates and planning.
Hence, the correct option is 1.
