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DK Essential Managers: Understanding Accounts by Stephen Brookson

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Understanding Ratios

A ratio is calculated by dividing one figure by another. Used logically and consistently, performance ratios can provide important indicators and highlight trends. Understand where ratios are useful and what they can reveal about performance.

DK Analyze profitability first, closely followed by asset efficiency.
DK Always look at performance ratios in the context of the business as a whole.

Using ratios

Ratios are most useful when produced and analyzed regularly to help identify important trends in areas such as cash and profit ...

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