Why is it important to understand the calculation and interpretation of ratios to complete a financial ratio analysis? Please provide pros and cons.© BrainMass Inc. brainmass.com June 4, 2020, 3:24 am ad1c9bdddf
The main advantage in really understanding financial ratios well and knowing how to interpret them is that it allows us to see exactly how the changes have taken place in a certain time period. We can perform a ratio analysis and determine how assets are being utilized now as compared to three months ago or a year ...
This solution explains why it is important to understand the calculation and interpretation of ratios to complete a financial ratio analysis. The pros and cons of having a thorough understanding are also provided.