7
Ratio Analysis
In This Chapter
Interpreting Industry Averages and Trends
Comparing Ratios Within Industries
In previous chapters, you read about different indicators of a company’s financial condition. Values such as current assets, inventory levels, sales, and accounts receivable help you understand how much money a company has, how much it owes, and how profitable it is.
These numbers can be useful if you know the company fairly well. For example, assume that you work for a company that has $2 million worth of materials in its finished goods inventory. You probably know whether that’s ...
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