Do you see the use of ratios as a tool in the evaluation and decision making...

Do you see the use of ratios as a tool in the evaluation and decision making process?

Expert Solution

Yes, Ratios are tools of evaluation and decision making process as it is the best quantitative factor to be considered while making investment related decision .

Ratios are highly flexible and can be adjusted according to the change in the forecasting and hence is a flexible approach.

Ratio have a wide gambit of different performance evaluation criteria like it an be applied to different aspect of a company like it can applied in regards with efficiency, profitability ,solvency etc.

It is a multidimensional analysis which can be applied through different economic scenarios to different types of company. So it have a wider application.It is highly figurative and each ratio tells a seperate aspect and each ratio can be interpreted in combination in order to arrive at a share price.

Share values are determined as undervalued and undervalued based upon Ratio analysis and investment decision are made upon those analysis so it is an inherent part of decision making.

jeff jeffy answered 2 years ago

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