Chapter 15

Article from:http://www.ventureline.com/FinAnal_comvsnd.asp

SUMMARY:

The article "Financial Ratio Analysis" shows us how to properly judge a company or investment well from seeing its ratio. It is imperative that the company or investment be compared to the performance of the industry in which it competes. The industry ratio analysis performed herein provides the latest of data. Financial ratio is a relationship that indicates something about an industry's activities, such as the ratio between the industry's current assets and current liabilities or between its accounts receivable and its annual sales. The basic source for these ratios are the company financial statements within the industry that contain figures on assets, liabilities, profits, and losses. Ratio analysis can reveal much about an industry. However, there are several points to keep in mind about ratios.

CONNECTION:

The article "Financial Ratio Analysis" is clearly relating to Chapter 15, "Analyzing Financial Statements", because there are lots of examples and rules of how to make the ratio of a company perfectly. During the Chapter 15, we have learned how to compare financial data and work out different ratios and percentages. That help us save time, save money, and invest wisely. The ideas that this article tells about how can we use the ratio of the companies to figure out more details.

REFLECTION:

After i read this article, I realize that it is necessary to keep track of sales, inventory, and other data for a company. Also I have known that there are more than one types of analysis such as trend analysis which used to compared over time, typically years and ratio analysis which compares a company's financial ratios to industry ratio averages. Therefore I really like the article, because it helps me a lot.