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Question
It is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the various items of balance sheet and the statement of profit and loss. Identify the process and state any two objectives of the identified process
Solution
The Process of identifying the financial strengths and weaknesses of the firm is Ratio Analysis.
Two Objectives
- To simplify the accounting information.
- To determine liquidity, solvency and profitability.
- To assess the operating efficiency of business.
- To help in comparative analysis.
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