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Why do analysts calculate financial ratios?

Why do analysts calculate financial ratios?

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Answer #1

Based on the objectives the ratios are calculated

For example if an analyst want to know the liquidity of an organisation then he will look for liquidity ratios etc in general we will find many insights of a company through financial ratios which will help us in making decisions like to buy a company / shares , to invest in that company to track the performance of a company with current year and previous years to find out reasons for low performance to take important decisions like leveraging strategy etc

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