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Question
It is technique which involves regrouping of data by application of arithmetical relationships. Identify the technique and state any two advantages of the technique identified.
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Solution
The technique highlighted in the above statement is "Ratio Analysis".
The advantages of Ratio Analysis are:
- Useful in assessing the operating efficiency of business.
- Simplifies, summarise and systematics accounting data to make it understandable.
- Helpful in business planning and forecasting.
- Assist in locating the weak areas of the business.
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