Final answer:
Financial ratios are important tools used in financial analysis to assess a company's performance and financial health. They provide insights into a company's liquidity and solvency, and are useful for evaluating profitability.
Step-by-step explanation:
Financial ratios are important tools used in financial analysis to assess a company's performance and financial health.
a) They provide insights into a company's liquidity. Ratios like the current ratio and quick ratio are used to measure a company's ability to meet its short-term financial obligations.
b) They are useful for evaluating profitability. Ratios such as the return on assets (ROA) and return on equity (ROE) measure a company's profitability and how efficiently it utilizes its resources.
d) They help in assessing solvency. Ratios like the debt-to-equity ratio and interest coverage ratio evaluate a company's ability to repay its long-term debts.
c) Ratios are not used in financial analysis. This statement is not true. Ratios are widely used in financial analysis to gain insights into a company's financial performance and health.