Class2&3 - Part3

Class2&3 - Part3 - Accounting Review - Part 2 Ratio...

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Unformatted text preview: Accounting Review - Part 2 Ratio Analysis Financial ratios help the firm, its creditors and investors to investigate the firms financial health Ratios allow for better comparison through time or between companies They should always be considered in comparison to peer companies and industry averages Who uses Financial Ratios? Internal users Performance evaluation compensation and comparison between divisions Planning for the future guide in estimating future cash flows External users Creditors Suppliers Customers Stockholders Benchmarking Ratios are not very helpful by themselves; so they need to be compared to something Time-Trend Analysis Used to see how the firms performance is changing through time Internal and external uses Peer Group Analysis Compare to similar companies or within industries SIC and NAICS codes Common Financial Ratios Short-term solvency or liquidity ratios...
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This note was uploaded on 01/29/2012 for the course BUSI 408 taught by Professor Croce during the Summer '08 term at UNC.

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Class2&3 - Part3 - Accounting Review - Part 2 Ratio...

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