Question : Which of the following is the Objective of Ratio Analysis?
Option 1:
It provides the data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry.
Option 2: To offer data for time-series analysis, i.e., to compare a firm's present ratios with its historical ratios.
Option 3: Both (1) and (2)
Option 4: None of the above
Correct Answer: Both (1) and (2)
Solution : The objective of Ratio Analysis are:
(1)It provides the data for cross-sectional analysis, comparing some chosen enterprises in the same industry.
(2)To offer data for time-series analysis, i.e., to compare a firm's current ratios with its historical ratios.
Hence, the correct option is 3.