Question

The tool of 'Analysis of Financial Statements' which helps to assess the profitability, solvency and efficiency of an enterprise is known as ______.

Options

• Cash flow statement

• Comparative statement

• Common size statement 

• Ratio analysis 

Answer 1

The tool of 'Analysis of Financial Statements' which helps to assess the profitability, solvency and efficiency of an enterprise is known as Ratio analysis.

Explanation:

In order to assess a company's financial performance and condition, ratio analysis involves calculating and understanding a variety of financial ratios obtained from the financial statements. These ratios aid in understanding elements including the enterprise's overall financial health, profitability, liquidity, solvency, and efficiency.