What is the main purpose of accounting ratios?

What is the main purpose of accounting ratios?

Step 1: Understand that accounting ratios are mathematical comparisons of different financial figures from a company's financial statements.
Step 2: Recognize that these ratios help in evaluating how well a business is performing financially.
Step 3: Learn that accounting ratios can show the company's profitability, liquidity, efficiency, and solvency.
Step 4: Realize that by using these ratios, investors and managers can make informed decisions about the business's financial health.

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