What is the term for the comparison of two or more amounts on a financial statement and the evaluation of the relationship between these two amounts?

• A. Current Ratio
• B. Ratio Analysis
• C. Debt Ratio
• D. Net Profit on Sales Ratio

Answer: (B)

The idea being tested is ratio analysis—the process of comparing two or more figures from financial statements to understand how they relate to one another. Ratios turn raw numbers into meaningful measurements by placing one amount in relation to another, which helps you assess aspects like liquidity, profitability, solvency, and efficiency. This approach lets you compare performance over time or against other firms.

The other options are specific ratios that fall under ratio analysis: the current ratio looks at short‑term liquidity, the debt ratio measures leverage, and the net profit on sales ratio (net profit margin) gauges profitability relative to revenue. The term that encompasses comparing amounts and evaluating their relationship in a broad sense is ratio analysis.