1.0 Last weeks class was interesting but I will definitely need to go over the ratios again before starting the assignment. It may be simple maths but if you don’t pick the correct figures from the financial reports you are stuffed! I do find the pace of the class a bit rushed and trying to write down what Nadesa is saying I find I am missing some things he is saying.
2.0 Ratio analysis does provide information about the health and fitness of a business as the data used is from the different sections that make up the financial statements. The analysis can identify areas where performance of the company has improved or deteriorated when compared to past years.
3.0 Ratio analysis is limited in that they only give a quick, first step indication of the performance of a company and further investigation would be needed to give a more in depth view of the performance. As an example any ratios derived from the balance sheet do not give a complete picture of the performance for the whole of the financial year as the balance sheet is just providing information as at that point in time.
Christine
