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Financial ratio's.
Member rating: No Rating | Words: | Submitted: Mon Jun 19 2006
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INTRODUCTION A financial ratio is an expression of the relationship between two items selected from the income statement or the balance sheet of a company. Ratio analysis helps you evaluate the weak and strong points in your financial and managerial performance. However, ratios have limitations. Since the information used to derive ratios is itself based on accounting rules and personal judgments, as well as facts, the ratios cannot be considered absolute indicators of a firm's financial position. Ratios are only one means of assessing the performance of the firm and must be considered in perspective with many other measures. They should be used as a point of departure for further analysis and not as an end in themselves. INTERPRETATION OF FINANCIAL ACCOUNTS It is very important to comprehend and analyze the companies' annual report and therefore their financial situation especially from the shareholders, investors and employees point of view. To achieve this aim...
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