abhishreshthaa
Abhijeet S
STANDARDS FOR COMPARISON
Ratio analysis to be more effective requires certain standard ratios facilitates the comparison and evaluation of actual ratios. These are very much useful in the above mentioned comparisons. The various types of standards employed in comparison of ratios are:
1. Historical Standards are the past ratios of business organization Present performances are compared with the past ratios.
2. Absolute Standards are rules of thumb.
3. Horizontal Standards are average ratios of the entire industry or firms in the same industry or of the same firm in the past and the present.
4. Budget Standards are based on budget figures which are user comparison with actual ratios
Ratio analysis to be more effective requires certain standard ratios facilitates the comparison and evaluation of actual ratios. These are very much useful in the above mentioned comparisons. The various types of standards employed in comparison of ratios are:
1. Historical Standards are the past ratios of business organization Present performances are compared with the past ratios.
2. Absolute Standards are rules of thumb.
3. Horizontal Standards are average ratios of the entire industry or firms in the same industry or of the same firm in the past and the present.
4. Budget Standards are based on budget figures which are user comparison with actual ratios