Creditors and investors study the financial
statements content and determine several
varieties of financial measures before they make and investing and creditdecisions, because they
think that financial indicators have prognostic control.
ratios offer valuable information in quantitative form to analyst and investors
who want to assess the firm’s operation and its physical position inside
industry over time. These are employed for following purposes:
Point to the
process of organizational turnaround
creditworthy firms from others
target of acquisition
To value firms
Generally firm like commercial banks
need to employ accounting ratios to evaluate their performance mainly liquidity
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