Question

Do you see the use of ratios as a tool the evaluation and decision making process?

Answer 1

yes, we are using ratio as tool of evaluation and decision making process.

Basically, ratio analysis is used in determining:
1.The short-term and long-term liquidity of a firm or the
ability of the firm to meet its short-term (current) and
long-term financial obligations.
2. The riskness or long-term solvency of a business. That
is, the level of gearing or leverage or the extent the firm
is financed by debt.
3. The Performance, profitability or overall earning
power of a business.
4. The assets utilization or efficiency in the use of assets
of a business to generate sales revenue.
5. The potential return and risk associated with owing
shares or investing in the stock a company