Ratio Analysis:-
Ratios show the trends and may help in focusing attention to the more important areas where detailed
Ratios show the trends and may help in focusing attention to the more important areas where detailed
checking may be necessary. Such ratio analysis may identify anything abnormal or anything which
deviates from the expected and the known. Ratios highlight only symptoms; it is for the auditor to study
those symptoms properly, correlate them and reach defi nite conclusions or identify the areas for further
enquiries. A cost auditor has to work out the fi nancial ratios contained in Para No. 24 of the Annexure to
the Cost Auditor Reports Rules and also to comment on them.
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