Page 10 - FINANCE PART 2 - 7. Analysis And Interpretation Of Financial And Non-financial Information
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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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