Introduction 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 Definition “a ratio is simply one number expressed in terms of another. It is found by dividing one number into the other” - R.N.Anthony Sources of these ratios: 1. Balance sheet 2. Income statement 3. Statement of cash flow 4. Statement of retained earning 5. Financial statements Uses of ratio analysis Helpful in analysis of financial statement: - It is helpful to analysis the balance sheet and profit and loss account Simplification of accounting data: - With the help of ratio analysis we easily understand the accounting data Helpful