Ratio analysis | Business Studies Theory | Business & Marketing Resources

Business Studies for Students and Teachers.

The Times 100 offers a range of free information for students and teachers of business studies.

Theory Home | Business Theory | Download Theory | Relevant Content

  Ratio analysis


Ratio analysis is an accounting techniques used to compare one figure with another figure. For example if the A business is twice as big as the B business we could represent the ratio of the size of the sizes of the two business in the following way:
A : B = 2 : 1
Ratios help us to instantly check whether a business is sound, and also to compare ratios over a period in time. Ratios can be used for the following purposes:
1. Examining trends in results over a number of years.
2. Comparing the results of a business with results of other businesses.
3. Comparing the results of the business with the average results of all businesses in that sector.
In business we also use the term ratio to apply to other measures such as % calculations e.g. profit % figures.


Here are some of the most important ratios used in business:
 
Actions
Using the buttons below you can download this case study, print this page, download or play an audio transcription of this case study, tell a friend and more. Have any feedback? Tell us!

PDF Download PDF
Related Theory
Other revision theory of interst: