accounting ratio

Accounting ratioclick for a larger image
Fig. 4 Accounting ratio. The ratio pyramid.

accounting ratio

a means of placing a firm's accounting results in context by expressing the figures as ratios or percentages of other figures in order to appraise their ‘bigness’ or ‘smallness’. Examples include RETURN ON CAPITAL EMPLOYED and STOCK TURNOVER RATIO. Fig. 4 shows the main ratios used and the relationship between them.
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