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Question
State true or false with reason.
Ratio analysis measures profitability efficiency and financial soundness of the business.
Options
True
False
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Solution
This statement is True.
With the help of profitability ratios (Gross profit, Net profit and Operating profit) one can get the idea of profitability efficiency of the firm and with the help of liquidity ratios (Current ratio and liquid ratio) one can get the idea of solvency or financial soundness of the business.
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