REVIEW OF LITERATURE
M.Y KHAN AND P.K.JAIN says in their book ‘Management Accounting’ that, profitability is a measure of efficiency and search for it provides an incentive to achieve efficiency. Profitability also indicate public acceptance of the product and shown that the firm can produce completely. Moreover, profit provides the money for repaying the debt incurred to finance the project and recourses for internal financing of expansion.
Dr. E.A LIZZY in her book of ‘management accounting explains that, the analysis of financial statement with the help of ratios may be termed as ratio analysis. It implies the process of computing, determining and presenting the relationship of items and groups of items of financial statements. Ratio analysis helps comparisons and interpretations of these ratios and there use for future projection.
MEIGS.W.B in his book ‘The basic for business decisions’ (1972) says that, Ratio analysis is a widely used tool of financial analysis, it is a systematic use of ratio to interpret the financial statements, so that the strength and weakness of a firm as well as its historical performance and current financial condition can be determined.
J.BATTY defined accounting ratio in his book ‘Management Accountancy’ (1975) as, “the term accounting ratio is used to describe significant relationships which exist between figures shown in balance sheet, in a profit and loss account, in a budgetary control system or in any other part of the accounting organization.”
HARRY GUTHMANN in is book ‘corporate financial analysis’ explains that, “the first and most important function of financial statement is of course to serve those who control and direct the business to the end securing the profits and maintaining a sound financial condition, questions as to how efficiently the capital of the business is being utilized, how well credit standards are…...