ratio analysis



Single most important technique of financial analysis in which quantities are converted into ratios for meaningful comparisons, with past ratios and ratios of other firms in the same or different industries. Ratio analysis determines trends and exposes strengths or weaknesses of a firm.

Use ratio analysis in a sentence

  • I had to be sure that I knew what I was talking about when it came to the ratio analysis, because it was very important.

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  • When a financial advisor talks to you about your car and house payments in comparison to your alcohol purchases, he or she may use a ratio analysis in order to provide a better example.

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  • You should be able to break down the ratio analysis of a potential project to figure out if you should proceed.

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