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Running head: RATIO ANALYSIS1Ratio AnalysisNatalia BanksACC 561May 11, 2017Myrtle Clark
RATIO ANALYSIS2Ratio AnalysisA ratio analysis is a form of financial statement analysis to get a quick look of a company’s financial performance in number of areas. They are categorized as: short term solvency ratio, debt management, asset management, profitability, and market value. A ratio analysis has many important features. The data is readily available, the computation helps the comparison of businesses that are different in size, and used to compare a business’s financial performance with industry averages. A ratio analysis should only be used as the first step in a financial analysis. This paper will try and examine the financial statements given in the scenario of Mr. Jason wanting an 8 year loan to expand his operations.ScenarioPaul Jason has come to me, the loan officer for White Sands Bank of Taos, He wants an 8year loan to expand his company P. Jason Corp.’s operations. These funds would purchase new equipment and he has provided me with current ratios, asset turnovers, net income, and earnings per share for 2016 and 2017. Why Financial Statements are AuditedA financial statement audit is the examination of a company’s financial statement and disclosures. The auditor reports their results, verifying to the fairness of the presentation of the statements and disclosures. The purpose of an audit is to add sincerity to reported financial position and performance of a company.