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The interpretation of financial statements

Interpretation of financial statements

Financial statements provide a great deal of information. However, one problem
with these statements is that they show only year-end figures or figures relating
to a particular accounting period. The financial statements on their own do not
always provide sufficient information to user groups, even though they have
been prepared in accordance with International Financial Reporting Standards.

Calculating and interpreting ratios may provide users with further insight into the
profitability, liquidity and risk of an entity.

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