Ratio and Comparative analysis
There are many ways to evaluate and compare financial statements. Although there are many different ways and devices, no one device is more useful than another. According to "Financial Statement Analysis Primer" (n.d.), ”Every situation faced by the investment analyst is different, and the answers needed are often obtained only upon close examination of the interrelationships among all the data provided.”. Ratio analysis is a useful tool that is used to identify a quick indication of a firm’s financial performance in several different areas. Comparative analysis is used when comparing the same information for two or more different dates or periods. At my current workplace, we use comparative analysis to see how certain products or classes sell during the same dates but for the past few years. This helps us prepare our merchandising and presentation efforts. The Comparative is the express between two entities or groups quantity and degree. Ratio analysis is the backbone on the financial statements, For Example the line items of Balance sheet, Income statement, and Cash flow statement, one or all can be calculate to evaluate company’s financial activity such as liquidity, operating, liabilities or revenues and expenses of the business. Also the ratio analysis help to see if the company future growth. I work as Supply Technician that deals with logistics of items or goods, ratio analysis are based on the items or goods that are sold or evaluate how the product is in and out. Companies or management have to understand the global market and understand how regulatory impact the business, also deal compliance of laws that have a huge impact to the company value. For example, the organizations indirect sales data has a role when calculating ratios or showing comparisons or relationship between two of the same product that are different in sales, you may have to use proportions to measure the items or convert something into quantity....
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Accounting: Tools for Business Decision Making.
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