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A Manager's Guide to Financial Analysis by Eliot H. Sherman

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3

Ratio Analysis for Financial Statements

Learning Objectives

By the end of this chapter, you should be able to:

•  Name the four principal types of ratios and describe how they are used.

•  Identify the four applications in which financial ratios are used.

•  Explain the interrelationship of profitability, leverage, activity, and liquidity ratios.

•  Apply a series of ratios to perform an intracompany, intercompany, and industry comparison analysis.

•  Explain the importance of alternative asset management treatment.

•  Explain the importance of alternative liability and equity treatment.

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