Question

Multiple Choice Question

Calculating and interpreting financial ratios developed from the firm's financial statements is called:
O
asset analysis
O income analysis
Oratio analysis
O financial analysis

Answer 1

Financial analysis involves calculating and interpreting financial ratios developed from a firm's financial statements to assess its financial performance and make informed decisions.

Step-by-step explanation:

The correct answer is financial analysis.

Financial analysis involves calculating and interpreting financial ratios developed from a firm's financial statements to assess its financial performance and make informed decisions. It helps to evaluate a company's profitability, liquidity, solvency, and efficiency. By examining ratios like the current ratio, return on equity, and profit margin, financial analysts can gain insights into a company's financial health and compare it with industry benchmarks.