Fabulous Ratio Analysis Interpretation Examples
That ratio analysis is a critical tool when it comes to the analysis of an entitys performance is not an overstatement.
Ratio analysis interpretation examples. In 2011 the debt ratio is 278. For example current ratio may be studied along with liquid ratio. In basic terms ratio analysis comes in handy in the evaluation of a firms current financial position and the direction this position is expected to take in the future Besley and Brigham 2008 p.
In 2011 the business is using more equity financing than debt financing to operate the company. It is also expressed as a proportion for example ratio of current assets to current liabilities is say 5 00000. Debt Equity Ratio Interpretation Debt Equity ratio helps us see the proportion of debt and equity in the capital structure of the company.
Horizontal Analysis Example Lets apply the same procedures to the liability and stockholders equity sections of the balance sheet. The percentage of gross profit to sales or the working capital ratio. This chapter focuses on the interpretation and analysis of fi nancial statements.
For example the ratio of stock turnover is say 5000010000 or 5 times which simply conveys that stock has been turned over 5 times. Horizontal Analysis Example 11500 23500 100 489. Because bigger number indicates that the company has more current assets for.
Current Ratio 167 or 5. On the other hand if a company doesnt take debt at all it may lose out on the leverage. 2 Interpretation Here the results of analysis are used to judge a business performanceThis is done by making comparisons a with other similar businesses usually within the same year eg.
Comparisons industry and group comparisons and detailed ratio analysis reports for all standard ratios or for selected ratio types. Therefore for the financial analysis for business. Analysis and interpretation of financial statements with the help of ratios is termed as ratio analysis.