What does the ratio trend analysis studies for forecasting?
Question: What does the ratio trend analysis studies for forecasting?
Ratio trend analysis studies the historical trends of financial ratios to forecast future performance. Financial ratios are used to analyze a company's financial statements and provide insights into its financial health and performance. Ratio trend analysis involves calculating and analyzing key ratios, such as profitability ratios, liquidity ratios, and solvency ratios, over a period of time to identify trends and patterns. These trends are then used to forecast future financial performance and make informed decisions. Ratio trend analysis is a popular forecasting technique as it is easy to use, requires minimal data, and can provide valuable insights into an organization's financial performance.
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