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Ratios
Introduction to Ratios
What is the Purpose of Ratio Analysis?
Ratios are an efficient tool at assessing a business’s performance. They are tool which can be used to compare the past performance of companies and the performance of different companies.
Ratios provide a summary of a company's performance into a single number or percentage, which makes it easy to compare past performance and different companies as you're just comparing two different numbers or percentages.
Ratio Hierarchy
There are a lot more ratios than shown above, however, these are the ones mentioned in the ATAR WACE Accounting and Finance Syllabus and the guide will only focus on these ratios.