CHAPTER ONE INTRODUCTION Ratio analysis is one of the analytical tools used in analyzing the financial statement of companies. Ratio analysis is simply measuring the relationship between two variables that are in the financial statement of the company. For example, x/y; this is a ratio that measures the relationship between x and y. Ratios analysis simplified, summarizes, and systematizes a long array of accounting figures. Its main contribution lies in bringing out the inter-relationship which exists between various segments of business. Ratios are more of a diagnostic tool that helps to identify problem areas and opportunities within a company. Accounting ratios has been frequently practicing for many years by companies, micro-finance institutions (MFI) and enterprises for decision making. Accounting ratios also help the managers of enterprises to know the profit and expenses and in general the financial health of the enterprise. This information is carefully prepared from fi...
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