The Concept of Financial Ratio Analysis

The Concept of Financial Ratio Analysis

In the words of Udeh (2000), Ratio analysis is a very important tool of financial analysis.  It is defined as quotient of two mathematical expressions and/or as the mathematical relationship between two or more items expressed in figures.  Therefore, a ratio is used in financial analysis as a yard stick for evaluating the financial position and performance of a firm, as the absolute figures contained in the financial statements do not provide a meaningful information on the performance and financial position of a firm. [Read more…]