Fabulous Uses Of Ratio Analysis Pdf
Uses of Ratio Analysis.
Uses of ratio analysis pdf. Used internally to evaluate issues such as employee performance the efficiency of operations and credit policies and externally to evaluate potential investments and the credit-worthiness of borrowers among other things. For their financial support. The Analysis and Use of Financial Ratios.
Funders may use ratio analysis to measure your results against other organizations or make judgments concerning management effectiveness and mission impact. Iv Interpretation of the ratios. Whittington 1980 identified two principal uses of financial ratios.
Helps to understand efficacy of decisions. Calculated using reliable accurate financial information does your financial information reflect your true cost picture Calculated consistently from period to period. Requires access to financial statements of competitors.
The tradi- tional normative use of the measurement of a firms ratio compared with a standard and the positive use in estimating empirical relationships usually for predictive purposes. Example of Cross-Sectional Analysis. Ratio analysis is an effective tool to assist the analyst in answering some basic questions such as.
Accounting ratios may just be used as symptom like blood pressure pulse rate body temperature etc. Ratios allow the bank to compare its business against different standards using the figures on its financial statements. Similarly the financial analyst should.
What are its strengths and weaknesses. These are summarised as follows. How well is the company doing.