Ratio analysis

Ratio analysis is the process of examining and comparing financial information by calculating meaningful financial statement figure percentages instead of comparing line items from each financial statement.

Managers and investors use a number of different tools and comparisons to tell whether a company is doing well and whether it is worth investing in. The most common ways people analysis a company’s performance are horizontal analysi and ratio analysis. Horizontal and vertical analyzes compare a company’s performance over time and to a base or set of