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Question
It is technique which involves regrouping of data by application of arithmetical relationships. Identify the technique and state any two advantages of the technique identified.
Solution
The technique highlighted in the above statement is "Ratio Analysis".
The advantages of Ratio Analysis are:
- Useful in assessing the operating efficiency of business.
- Simplifies, summarise and systematics accounting data to make it understandable.
- Helpful in business planning and forecasting.
- Assist in locating the weak areas of the business.
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