Ratio Analysis
Since venture capital units construct pro forma balance sheets and income statements, some ratio analysis is usually done. Calculations of financial ratios are extremely valuable as an analytical and control mechanism to test the financials of a new corporate entrepreneurial venture. These ratios serve as a measure of the financial strengths and weaknesses of the proposed corporate entrepreneurial venture, but they should be used with caution since they are only one control measure for interpreting its financial success. There is no single set of ratios that must be used, nor are there standard definitions for all ratios. There are industry rules of thumb that the corporate entrepreneur can use to help create the financial data. ...
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