unit2financediscussion.docx
Discuss the limitations of ratio analysis.
Many discussion opportunities come up where you need to respond to other people's opinions and comments.
Please take this opportunity to consider the subject under discussion and formulate a response that answers all of the questions and fully demonstrates your understanding of the topic. To illustrate your knowledge, please take time to provide evidence that shows how you formulated your answers by citing sources to justify your response.
I need a discussion for the assignment above at least 100 words.
Then two responses below for the classmates
Need two responses for the two classmate below
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David Norman
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6/21/2014 7:25:33 PM
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Discuss the limitations of ratio analysis
Ratio Analysis provides business owners with data and comparisons to other companies, but does not always compare to companies in the same business's in their industry. It also does not always compare your business to the best of your competitors, but to an average, so a limitation is that it is comparing you to an average, but not the best performers in your industry. Another limitation of ratio analysis is that it typically looks at old information, and different accounting standards don't always show things apples to apples, so not only is the data always current, but the different standards make the analysis less useful because of the different accounting standards utilized.
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Rosita Shadzhe
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6/21/2014 6:32:15 PM
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Hello,
A consistent financial analysis is very important in a company's life. It is important to be able to pinpoint where the company is lacking in performance in order to create a successful future for it. There are multiple ways to measure a company's performance and those ways include ratios. What is important to do is to be able to interpret ratios correctly and utilize them in the right way which can be kind of tricky. Ratios oftentimes will not explain what is wrong exactly; instead they will give a number and it's up to the analyst to figure out what it means in that particular scenario. It may also be difficult to compare the statistics of one company to the industry's average especially if there isn't a similar company to compare with.
Rosita Shadzhe
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princess68
