The Application Of Ratio Analysis To Business Organisations

Financial information provided in financial statements are useful in business decisions, however, it must be noted that financial statements are means to an end in themselves. This study examines the effectiveness of the application of Ratio analysis to business organizations and the need to understand and interprete the contents of financial statements. Various classes of ratios were examined under literature review. This gives an insight to how ratios can be used to predict and determine organization’s performance over a period of time. Usefulness of ratio analysis was discussed and its li…