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Article: Accounting ratios. (Checklist 192).(checklist for interpreting, understanding accounting ratios)
- Article from:
- Checklists
- Article date:
- January 1, 2001
CopyrightCOPYRIGHT 2001 Chartered Management Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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This checklist offers guidance on understanding and interpreting accounting ratios. An understanding of the significance of such ratios will enable a clearer appreciation of the financial performance of a company and will provide a more balanced view of the figures presented in any financial report.
Management Standards
This checklist has relevance to the MSC National Occupational Standards for Management: Key Role B--Manage Resources.
Definition
An accounting ratio is the comparison of two figures in a set of accounts. Sometimes it may be expressed as a ratio (as in 1:2) and sometimes as a percentage. Some accounting ratios are well ...