11. Business Trend Analysis and Operational Ratios

What’s in this chapter?

• What to look for in operational trends

• What to look for in margins

• The basics of how to lay out financial information to examine trends and margins

• How to examine trends in capital spending

The ratios we used in the preceding chapter could all be characterized as financial or credit metrics. They measure how well the company can service aspects of its debt structure. They are the most common terms used day-to-day to determine a large portion of relative value, or what to buy or sell.

However, it is also key to look at how well the underlying business is doing both over time and compared to other companies. This chapter explores some of the ways to examine these ...

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