Research Paper Easy-Financial analysis
A primary purpose of financial ratio analysis is to help managers identify and prioritize issues requiring their investigation and further action. This analysis may also provide insights into the underlying causes for these issues. Financial ratios describe the relationships between different financial statement items or between financial statement and nonfinancial statement information. Managers examine these relationships and changes in them over time as part of their evaluation of the financial condition and performance of a business. Managers can perform evaluations that are more robust by comparing such ratios for their business with those of its competitors and its industry as a whole as part of “benchmarking” analysis
Financial ratio analysis is a widely used, but poorly understood and overrated, management tool. Inexperienced managers often compute these ratios without understanding that they are a beginning, rather than the end, of an evaluation of a business’ financial condition and performance. A more pervasive weakness of financial ratios is that they do not permit managers and others to assess the long-run sustainability of a business’ operations within a society
What relationships (ratios) will you primarily focus on in your role as a manager within your functional area of responsibility, such as marketing, sales, product development, operations, human resources, or finance?
What additional measurements (ratios) will you use to help evaluate and improve the sustainability of your business within its larger social context over the long run?