Chapter 15

Financial Ratio Analysis

About This Chapter

Chapter 15 continues our review of the investment value section by exploring the topic of ratio analysis. The purpose of ratio analysis is to measure the value of an organization, and by extension the value of investments that have been made in an organization, through the use of statistics that are calculated with information that can be found within the financial statements.

Thus, in this chapter, we explore the calculation of a pair of financial ratios and discuss their application to issues of business planning and management. Although there are thousands of financial ratios that are commonly utilized throughout the global economy, we focus on two well-established statistics: return ...

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