CHAPTER 6

Analysis of the Cash Flow Statement: A New Format

Introduction

6.1.To analyze the three companies we will first look at a few ratios we need and then explain how to change the Group 1 reconciliation format so that we may compare different companies and different years of the same company. This chapter will build the framework for our analysis.

Which ratios do we calculate, and what are we looking for?

6.2.We will calculate the following ratios for all the three companies. The calculations are done in chapter 7; here I will explain how to calculate the ratios and also how to draw conclusions from them.

6.2.1.Commission/premium

The lower the percentage, the better it is for the profitability of the company. A lower percentage may, however, ...

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