Ratio Analysis

Ratio Analysis
A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity, financing and liquidity. Some common ratios include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and working capital.


Investment dictionary. . 2012.

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  • ratio analysis — examination of calculated indices based on accountants reports …   English contemporary dictionary

  • ratio analysis — / reɪʃiəυ əˌnæləsɪs/ noun a method of analysing the performance of a company by showing the figures in its accounts as ratios and comparing them with those of other companies …   Dictionary of banking and finance

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  • ratio — A *quantitative relationship between two amounts. A ratio is calculated by dividing one amount by another, to see how many times the value of one item is contained in the other. See *ratio analysis …   Auditor's dictionary

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