ratio analysis, asset turnover, financial info

ratio analysis, asset turnover, financial info -...

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Introduction to ratio analysis Financial information is always prepared to satisfy in some way the needs of various interested parties  (the " users of accounts "). Stakeholders in the business (whether they are internal or external to the  business) seek information to find out three fundamental questions: (1) How is the business trading? (2) How strong is the financial position? (3) What are the future prospects for the business? For outsiders, published financial accounts are an important source of information to enable them to  answer the above questions. To some degree or other, all interested parties will want to ask questions about financial information which  is likely to fall into one or other of the following categories, and be about: Performance Area Key Issues Profitability Is   the   business   making   a   profit? How   efficient   is   the   business   at   turning   revenues   into   profit? Is   it   enough   to   finance   reinvestment? Is   it   growing? Is   it   sustainable   (high   quality)? How does it compare with the rest of the industry? Financial efficiency Is   the   business   making   best   use   of   its   resources?  Is   it   generating   adequate   returns   from   its   investments?  Is it managing its working capital properly? Liquidity and gearing Is   the   business   able   to   meet   its   short-term   debts   as   they   fall   due? Is
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This note was uploaded on 03/18/2012 for the course ACCT 205 taught by Professor Christensen during the Spring '11 term at Boise State.

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ratio analysis, asset turnover, financial info -...

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