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interpret the various ratios calculated for intra-firm and inter-firm comparisons. Financial statements aim at providing financial information about a business enterprise to meet the information needs of the decision-makers.
Financial ratios are grouped into the following categories: Liquidity ratios; Leverage ratios; Efficiency ratios; Profitability ratios; Market value ratios; Uses and Users of Financial Ratio Analysis. Analysis of financial ratios serves two main purposes: 1. Track company performance
1 lis 2015 · financial ratios to a peer group is a standard analytical practice that helps give a basis for understanding company-specific ratios. By using a relative comparison to a group of companies operating in similar business lines, an analyst can form conclusions to help decision making. Comparisons are useful when in
Corporate finance ratios are quantitative measures that are used to assess businesses. These ratios are used by financial analysts, equity research analysts, investors, and asset managers to evaluate the overall financial health of businesses, with the end goal of making better investment decisions.
By the end of this section you should be able to: • explain the meaning of the term accounting ratios • classify accounting ratios into profitability, liquidity, efficiency and investment ratios • define liquidity ratios • calculate liquidity ratios (current, quick) • explain the uses of liquidity ratios.
explains the calculation and interpretation of common size balance sheets as well as common size income statements. This Chapter also defines a wide variety of ratios derived from financial statement information.
Part 1. Introduction to Financial Ratios. Part 2. Financial Ratios Using Balance Sheet Amounts. Part 3. Financial Ratios Using Income Statement Amounts. Part 4. Financial Ratios Using Amounts from the Balance Sheet and Income Statement. Part 5.
