INTRODUCTION TO RATIO ANALYSIS:

RATIO ANALYSIS is a widely used tool for financial analysis. It can be used to
compare the risk and return relationships of firms of different sizes. It can be
defined as the systematic use of ratio to interpret the financial statements so
that the strengths and weaknesses of a firm as well as its historical performance
and current financial condition can be determined.
The term RATIO refers to the numerical or quantitative relationship between
between two variables. This relationship can be expressed as:
1) Percentages
2) Fractions and,
3) Proportion of numbers.
The rationale of ratio analysis lies in the fact that it makes related information
comparable. A single figure by itself has no meaning but when expressed in terms
of a related figure, it yields significant inferences.

IMPORTANCE & SIGNIFICANCE:

This project report covers the definition and meaning of ratio analysis and it
elucidates the relevance of the study of ratio analysis to the said firm.
The project throws light on the importance of ratio analysis in the said firm.
Ratio analysis helps to compute ratios of the given company over a period of time,
which helps in determining whether the company is profit- making or not.
Ratio analysis also helps in determining the quantum of production of any
particular product so that the firm earns maximum profit and the wastages are
minimum.
INTRODUCTION TO RATIO ANALYSIS:
RATIO ANALYSIS is a widely used tool for financial analysis. It can be used to
compare the risk and return relationships of firms of different sizes. It can be
defined as the systematic use of ratio to interpret the financial statements so
that the strengths and weaknesses of a firm as well as its historical performance
and current financial condition can be determined.
The term RATIO refers to the numerical or quantitative relationship between
between two variables. This relationship can be expressed as:
1) Percentages
2) Fractions and,
3) Proportion of numbers.
The rationale of ratio analysis lies in the fact that it makes related information
comparable. A single figure by itself has no meaning but when expressed in terms
of a related figure, it yields significant inferences.

IMPORTANCE & SIGNIFICANCE:

This project report covers the definition and meaning of ratio analysis and it
elucidates the relevance of the study of ratio analysis to the said firm.
The project throws light on the importance of ratio analysis in the said firm.
Ratio analysis helps to compute ratios of the given company over a period of time,
which helps in determining whether the company is profit- making or not.
Ratio analysis also helps in determining the quantum of production of any
particular product so that the firm earns maximum profit and the wastages are
minimum.