Ratio analysis allows a business owner to identify potential problem areas in her/his business before they become business-threatening crises.

Question

Quizplus · Accepted Answer

Ratio analysis helps a business owner to analyze the financial performance of the business and identify areas of strengths and weaknesses. By comparing various financial ratios such as profitability ratios, liquidity ratios, and debt ratios, a business owner can identify potential problem areas and take corrective measures to avoid any business-threatening crisis. Therefore, the statement is true.

Ratio Analysis Allows a Business Owner to Identify Potential Problem