ATARMAxxing · WACE Accounting and Finance revision notes
Ratio preparation and interpretation and the limits of financial statement analysis
Evaluating financial information for planning, coordinating, controlling and investing
What this note covers
- Purpose of ratio analysis and the five categories
- Liquidity ratios: current and quick asset
- Efficiency ratios: debtor's collection and inventory turnover
- Profitability ratios: profit, rate of return on assets and times interest earned
- Leverage and market ratios
- Interpreting ratios together
- Limitations of financial statement analysis
- How this topic is examined and what separates a top response
8 sections · 12 key terms & formulas · 6 common mistakes
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