Accounting Measures Ratios

Accounting Measures Ratios - Accounting Measures: Assessing...

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Accounting Measures: Assessing the health of a business is not an easy task since corporations are extremely complex and each one is different from every other one. Therefore, it is not possible to learn a specific process or a limited number of measures that will always work to tell you about the financial well being of a business entity. Instead, you can learn different diagnostic tools that will be useful in all situations, though an individual tool may be more or less useful in any specific application. An example could be a physician diagnosing a patient. Some measures are always useful, like taking the person’s temperature and blood pressure. The parallel for a business could be net income and cash flows. If any of these measures are bad then we know that there is a problem, but we do not know just from these just what the problem is or how bad is the condition of the patient. The doctor, and the financial analyst, will use the information from early and simple examinations to focus their attention in greater and greater detail to understand exactly what is going on with the patient and the business. As a starting point, let us consider several of the financial measures that are used commonly (and in the Capsim Business Simulation) to assess the financial progress and
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This note was uploaded on 03/14/2011 for the course WCOB 3016 taught by Professor Staff during the Spring '08 term at Arkansas.

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Accounting Measures Ratios - Accounting Measures: Assessing...

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