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Friday, April 15, 2011

Advantages of Ratio Analysis

Following are the main advantages of Financial Ratio Analysis:

1) Ratios are easy to understand by all users.

2) It is a very useful technique for comparison purpose. Changes in ratios over time can indicate the firm's performance, and it can also be used to compare with businesses in similar industries.

3) The calculation of profitability ratios can help to measure the profitability and


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