ratio analysis


ratio analysis
The use of accounting ratios to evaluate a company's operating performance and financial stability. Such ratios as return on capital employed and gross profit percentage can be used to assess profitability. The liquidity ratio can be used to examine solvency and gearing ratios to examine the financial structure of the company. In conducting an analysis comparisons will be made with other companies and with industry averages over a period of time. The analysis of ratios can indicate how well a company is run, the risks of financial insolvency, and the financial returns provided.

Accounting dictionary. 2014.

Look at other dictionaries:

  • ratio analysis — A way of expressing relationships between a firm s accounting numbers and their trends over time that analysts use to establish values and evaluate risks. Bloomberg Financial Dictionary * * * ratio analysis ratio analysis ➔ analysis * * *… …   Financial and business terms

  • Ratio Analysis — A tool used by individuals to conduct a quantitative analysis of information in a company s financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the… …   Investment dictionary

  • ratio analysis — The analysis of *financial statements through the investigation and interpretation of *ratios. Examples of important ratios include (i) the *acid test ratio, (ii) the *current ratio, (iii) the *debt equity ratio, (iv) the *interest coverage ratio …   Auditor's dictionary

  • ratio analysis — The use of accounting ratios to evaluate a company s operating performance and financial stability. Such ratios as return on capital employed and gross profit percentage can be used to assess profitability. The liquid ratio can be used to examine …   Big dictionary of business and management

  • ratio analysis — examination of calculated indices based on accountants reports …   English contemporary dictionary

  • ratio analysis — / reɪʃiəυ əˌnæləsɪs/ noun a method of analysing the performance of a company by showing the figures in its accounts as ratios and comparing them with those of other companies …   Dictionary of banking and finance

  • Cross-Sectional Ratio Analysis — A method of analysis that compares a firm s ratios with some chosen industry benchmark. The benchmark usually chosen is the average ratio value for all firms in an industry for the time period under study. Bloomberg Financial Dictionary …   Financial and business terms

  • trend ratio analysis — The comparison of the successive values of each ratio for a single firm over a number of years. Bloomberg Financial Dictionary …   Financial and business terms

  • analysis — a‧nal‧y‧sis [əˈnælss] noun analyses PLURALFORM [ siːz] [countable, uncountable] 1. a careful examination of something in order to understand it better: • The researchers carried out a detailed analysis of recent trends in share prices. •… …   Financial and business terms

  • ratio — A *quantitative relationship between two amounts. A ratio is calculated by dividing one amount by another, to see how many times the value of one item is contained in the other. See *ratio analysis …   Auditor's dictionary