Question

It is technique which involves regrouping of data by application of arithmetical relationships. " Identify the technique highlighted in the above statement and state its any two objectives.

Answer 1

The technique highlighted in the above statement is "Ratio Analysis".

The objectives of Ratio Analysis are:

1. To simplify the accounting information.
2. To analyse the profitability of a business.
3. To assess the operating efficiency of a business.
4. To determine short-term solvency (liquidity) and long-term solvency of a business.