Ratio analysis is a powerful tool for financial analysis. A meaningful analysis of a financial statement is made possible by the use of ratios.
Ratios are a set of figures compared with another set. The comparison gives an understanding of the financial position of a business unit. There are a number of ratios which can be computed from a single set of financial statements. The ratios to be computed depend on the purpose for which these ratios are required. A single ratio may sometimes give some information, but to make a comprehensive analysis, a set of inter-related ratios are required to be analysed.
To view the Ratio Analysis
Go to Gateway of Tally> Ratio Analysis
The Ratio Analysis screen is displayed as shown.
The screen is divided into two parts:
The Principal Groups are the key figures that give perspective to the ratios.
Principal Ratios relate two pieces of financial data to obtain a comparison that is meaningful.