Chapter 6. Statement Analysis
Chapters 1–4 discussed the creation of income statements and balance sheets, and how to use them for reporting purposes. This chapter, as well as Chapter 7, “Ratio Analysis,” describes how to use the information in income statements and balance sheets to improve your insight into business operations.
No dollar amount in a financial report stands on its own—let alone the report itself. The knowledge that a company’s total operating expenses during 2001 were $250 million is not, by itself, very informative. To understand ...
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