Ratio analysis

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Ratio analysis is an examination of the relationship between two numbers or sets of numbers on financial reports. Analyses of ratios, especially over time, can give a fairly clear picture of how well a company conducts its business.


Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Ratio analysis. An examination of the relationship between two numbers or sets of numbers on financial reports. Analyses of ratios, especially over time, can give a fairly clear picture of how well a company conducts its business.

According to Managerial Accounting by Braun, Tietz (5th edition),

Ratio analysis. Evaluating the relationships between two or more key components of the financial statements.

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