Financial ratios are the primary tools for the analysis of financial statements which provides the basis for valuing a business and appraising its financial health.
This chapter introduces these concepts in a framework which will be used throughout the book. The financial statements of Daimler-Chrysler, reviewed in Chapters 1 and 2, will form the example for this chapter.
A summary of the ratios dealt with in this chapter is presented in Appendix 3A at the end of the chapter.
Tables 3.1 to 3.3 report summary financial statements for Daimler-Chrysler. The income statement and cash flow statements in Tables 3.2 and 3.3 respectively, present data in detail for three years and partially ...