Page 10 - MAC4861_2 Finance class slides part 2

Analysis and interpretation of financial and non-financial information

Discuss / comment on ratio/s calculated

• You must understand what is meant by each ratio so that

you can interpret the ratio.

• Compare the ratio to a benchmark (prior periods / similar

companies).

• Simply stating a ratio has increased or decreased in not
sufficient. You need to state whether the ratio has improved

or deteriorated.

• Provide reasons for the ratio based on information provided
in the question / general knowledge.

• Discuss what impact this is likely to have on the business as
well as remedial action to address certain issues.

• EXTREMELY IMPORTANT – WHERE POSSIBLE YOU SHOULD

USE MARKET VALUES AND NOT BOOK VALUES!!!

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