From the course: Finance for Non-Financial Managers (2015)
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What is financial ratio analysis?
From the course: Finance for Non-Financial Managers (2015)
What is financial ratio analysis?
- Now when it comes to financial ratio analysis, I like to borrow a quote from Winston Churchill. He said the following. "The further backward you look, "the further forward you can see." We analyze financial statements to tell us if a company has done well or poorly in the past and to help us see how the company might do in the future. Of course, it would be preferable if we could just get inside the company to do our analysis, but companies do not like outsiders poking around on the inside of their company. There's just too much proprietary information that they do not want exposed to outsiders, things like cost structures, pricing margins, and R and D efforts, to name a few. We must make do with the information that is available. Another point to keep in mind is that the analysis techniques that we will practice on the external financial statements can be developed and applied within a firm using proprietary,…
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