Which of the following are the objectives of Ratio Analysis?(A) To know the areas of the business which need more attention.
(B) To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.
(C) To know about the potential areas which can be improved with the effort in the desired direction.
(D) To provide information derived from financial statements useful for making projections and estimates for the future.Choose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Ratio analysis serves all of these vital management objectives:It highlights problematic functional areas needing focus (A).Provides key diagnostic data on core profitability, liquidity, efficiency, and safety parameters (B).Maps scopes for system updates and improvement paths (C).Generates data foundations to project corporate estimations and plans (D).Therefore, statements (A), (B), (C), and (D) are all correct.