1-Ratios can tell you quite a bit, and being able to interpret these ratios can
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Question
1-Ratios can tell you quite a bit, and being able to interpret these ratios can help businesses in many ways. Not only can these ratios help a business, but from an investing standpoint, reading these number correctly would help investors make the right decision while dealing with wealth management or stock. There are a few different things these numbers can tell; analyzing your business, efficiency of your business, and cash/ liquidity available to use. These numbers are only numbers if they are not read correctly, but when read correctly, these numbers can help a business or investor plan for any future. Being able to interpret what these numbers mean will essentially lead to a healthier business and better investments. Now, since these ratios need to be so precise, and because many different accounting firms use different practices, numbers are hard to completely rely on from business to business. Also, many need to realize that there are other aspects to analyzing a companies efficiency and liquidity levels. Outlying factors can effect a companies ratio such as economic downturn or recent mergers and moves.2-Ratios from financial statements can be used to analyze and compare different aspects of a firm, which is often easier for an individual than reading through the financial statements themselves. The ratios determine the how effective and efficient the firm is, while the statements themselves only give the raw data about the firm. The analysis of this data is what allows management and owners to see what areas are doing well and what areas are in need of improvement. Ratios from the financial statements allow an individual to see how liquid a firms assets are, how effectively these assets are being utilized in terms of generating profits, how quickly a firm is able to turn over their inventory, how long it takes them to collect on their receivable accounts, and also it allows them to easily see how their different profit numbers relate to their overall sales.
I need a response for theses paragraphs ! 1- 2 paragraphs
1-Ratios can tell you quite a bit, and being able to interpret these ratios can help businesses in many ways. Not only can these ratios help a business, but from an investing standpoint, reading these number correctly would help investors make the right decision while dealing with wealth management or stock. There are a few different things these numbers can tell; analyzing your business, efficiency of your business, and cash/ liquidity available to use. These numbers are only numbers if they are not read correctly, but when read correctly, these numbers can help a business or investor plan for any future. Being able to interpret what these numbers mean will essentially lead to a healthier business and better investments. Now, since these ratios need to be so precise, and because many different accounting firms use different practices, numbers are hard to completely rely on from business to business. Also, many need to realize that there are other aspects to analyzing a companies efficiency and liquidity levels. Outlying factors can effect a companies ratio such as economic downturn or recent mergers and moves.
2-Ratios from financial statements can be used to analyze and compare different aspects of a firm, which is often easier for an individual than reading through the financial statements themselves. The ratios determine the how effective and efficient the firm is, while the statements themselves only give the raw data about the firm. The analysis of this data is what allows management and owners to see what areas are doing well and what areas are in need of improvement. Ratios from the financial statements allow an individual to see how liquid a firms assets are, how effectively these assets are being utilized in terms of generating profits, how quickly a firm is able to turn over their inventory, how long it takes them to collect on their receivable accounts, and also it allows them to easily see how their different profit numbers relate to their overall sales.
I need a response for theses paragraphs ! 1- 2 paragraphs
1-Ratios can tell you quite a bit, and being able to interpret these ratios can help businesses in many ways. Not only can these ratios help a business, but from an investing standpoint, reading these number correctly would help investors make the right decision while dealing with wealth management or stock. There are a few different things these numbers can tell; analyzing your business, efficiency of your business, and cash/ liquidity available to use. These numbers are only numbers if they are not read correctly, but when read correctly, these numbers can help a business or investor plan for any future. Being able to interpret what these numbers mean will essentially lead to a healthier business and better investments. Now, since these ratios need to be so precise, and because many different accounting firms use different practices, numbers are hard to completely rely on from business to business. Also, many need to realize that there are other aspects to analyzing a companies efficiency and liquidity levels. Outlying factors can effect a companies ratio such as economic downturn or recent mergers and moves.
2-Ratios from financial statements can be used to analyze and compare different aspects of a firm, which is often easier for an individual than reading through the financial statements themselves. The ratios determine the how effective and efficient the firm is, while the statements themselves only give the raw data about the firm. The analysis of this data is what allows management and owners to see what areas are doing well and what areas are in need of improvement. Ratios from the financial statements allow an individual to see how liquid a firms assets are, how effectively these assets are being utilized in terms of generating profits, how quickly a firm is able to turn over their inventory, how long it takes them to collect on their receivable accounts, and also it allows them to easily see how their different profit numbers relate to their overall sales.
I need a response for theses paragraphs ! 1- 2 paragraphs
Explanation / Answer
Answer:
The pragraph about the ratios appropriately states the advantages and disadvantages of using the ratios to evaluate any financial statements and companies.
By understanding closely the nature of company it is possible identify which industry it belongs to.
A comapny might have its own benchmark which is different from the industry. So further investigation may be made to know its set benchmark and its approriateness.
It is required to understand the accounting policies and practices of the company before determining the ratios, so that appropriate and comaparable figure are used.
A ratio relevant for manufacturing company may not be relevant for a banking company. So ratio's approprite for appopriate industry should be used before judging and concluding.
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