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easyMCQCUET Accountancy 2025 2 June Shift 22026CUET Accountancy
1 mark

Which of the following is an advantage of ratio analysis?

  1. A
    Enabling SWOT analysis.
  2. B
    Window dressing.
  3. C
    Ignoring price level changes.
  4. D
    Forecasting.

Solution & Step-by-step Explanation

Ratio analysis helps managers evaluate a firm's internal strengths and weaknesses and compare them against industry trends to identify external opportunities and threats. This capability supports strategic SWOT assessments and financial forecasting. In contrast, window dressing and ignoring price level changes are limitations of ratio analysis rather than advantages.

Practice this question

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Which of the following is an advantage of ratio analysis?
A
Enabling SWOT analysis.
B
Window dressing.
C
Ignoring price level changes.
D
Forecasting.

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Financial StatementsRatio Analysis

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