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Its a quick and easy way to see how cheap or costly a stock is compared to its peers.

Important accounting ratios. The current ratio is a liquidity ratio which estimates the ability of a company to pay back short-term obligations. D All of the above. Accounting Ratios are important tools used by.

Thus they are equally useful to the internal management prospective investors creditors and outsiders etc. These showcase a relationship between two or more accounting numbers that are taken from the financial statements. The interrelationship that exists among the different items in the Financial Statement are revealed by accounting ratios.

This ratio is also known as cash asset ratio cash ratio and liquidity ratio. They become significant only when considered along with other figures. Importance of Ratio Analysis.

Managers Researchers Investors All of the above. Accounting Ratio is one of the powerful tools of the financial analysis. Some of the possible uses of accounting ratios are summarized below.

The importance of accounting ratios that is relationships worked out among various accounting data which are mutually interdependent and which influence each other in a significant manner arises from the fact that often absolute figures standing alone convey no meaning. Further such ratios are expressed either as a fraction percentage proportion or number of times. It is an mathematical expression which shows relationship between two accounting items.

Wrong - Your answer is wrong. Price-to-Earnings Ratio The price-to-earnings ratio or PE is likely the most famous ratio in the world. Correct - Your answer is correct.

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