Question : Which of the following is not the Objective of Ratio Analysis?
Option 1: To identify the areas of the business that require more attention
Option 2:
Not provide data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry
Option 3:
To give a more thorough study of the business's liquidity, solvency, activity, and profitability
Option 4: To provide data that will be beneficial for estimating and creating future strategies
Correct Answer:
Not provide data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry
Solution : Objectives of Ratio Analysis:
(i) To identify the areas of the business that require more attention.
(ii) To give a more thorough study of the business's liquidity, solvency, activity, and profitability.
(iii) It provides the data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry.
(iv)To provide data that will be beneficial for estimating and creating future strategies.
Hence, the correct option is 2.
