A BLUEPRINT OF RATIO ANALYSIS AS INFORMATION BASIS OF CORPORATION FINANCIAL MANAGEMENT
Journal Title: Problems of Management in the 21st Century - Year 2014, Vol 9, Issue 2
Abstract
Ratio analysis, due to its simplicity, has, for a long time, been one of the most frequently used methods of fnancial analysis. However, the question is how its results are a good basis for assessment of fnancial condition of a company by the external users of fnancial reports. If one takes into account numerous limitations, one can rather say that ratio analysis is a rough approximation of fnancial situation. What are the limitations, can they be overcome and in what way, can they, at least, be reduced, and to what extent the user has to take a reserved attitude when making business decisions on the basis of ratio analysis? The last but not the least, we should accept the fact that by insisting on fnancial analysis other aspects of the analyses are, in practice frequently marginalized, thus neglecting the fact that actually they themselves in the most direct manner point to the causes of potential disorders in business activities of a company.
Authors and Affiliations
Maja Andrijasevic, Vesna Pasic
Keywords
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