Ch.17_Operating Ratios

Ch.17_Operating Ratios - CHAPTER 17 Analyzing Financial...

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1 CHAPTER 17 Analyzing Financial Performance Types of analysis Financial statement analysis Other techniques Operating indicator analysis Limitations of performance analysis
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2 Learning Objectives Analyze business activity with accounting concepts and principles and make recommendations based on analysis Calculate and interpret ratios discussed in class Use ratios to characterize a business’s financial condition and position
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3 Several techniques Financial statement analysis Assess financial performance and condition Operating indicator analysis Explain financial performance and condition Overview
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4 Common size (vertical) analysis Accounts of interest expressed as % of other accounts [Account / Base account] * 100 Example: all income statement items expressed as % of total operating revenue Percentage change (horizontal) analysis Year-to-year changes in accounts expressed as % changes [[Current year – Prior year] / Prior year] * 100 Other Analytical Techniques
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This note was uploaded on 02/24/2010 for the course HPM 340 taught by Professor Reiter during the Spring '10 term at UNC.

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Ch.17_Operating Ratios - CHAPTER 17 Analyzing Financial...

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