Yard Stick Required in Ratio Analysis

1. Past performance of the company

The company's previous performance past ratio is needed to gauge or measure the company's presentation and in performance in particular changes whether good favorable, improved, even or same worse such the past.  Such comparison is rather then required to interpret the company's performance bearing in mind the factors such influenced the past and present performances.

2. Average industry ratios

These are helpful as they signify the average performance of various companies in a specified industry that is it gives the minimum presentation of a number of companies in a provided industry. These ratios are helpful in so far as to enable such analyst to create a reasonable comparison of the company's performance vis-à-vis another companies in the same industry.  Though, for this yardstick to be helpful the term average must include those companies that are not extremely.  That is very weak and very strong companies - that should be excluded to arrive on industry average figures.

3. Ratio of successful companies

Practically if the company can get figures of competitors who such are leading in the market so as to gauge to enable its performance against better performance.  Still this information is hard to get and sometimes it calls for private investigators as Private Eyes Ltd.

4. Ratio of budgeted performance

These are compared along with actual investigations and performance ratios are made of any unfavorable variance that should be explained.

Posted Date: 1/30/2013 1:34:26 AM | Location : United States

Ask an Expert

Related Discussions:- Yard stick required in ratio analysis, Assignment Help, Ask Question on Yard stick required in ratio analysis, Get Answer, Expert's Help, Yard stick required in ratio analysis Discussions

Write discussion on Yard stick required in ratio analysis
Your posts are moderated

Write your message here..

Related Questions

What you meant by monetary function in financial system, What you meant by ... What you meant by monetary function in financial system? A significant function of a financial system is the monetary function. The introduction about money in the economy enab

Determinants of working capital needs, Determinants of Working Capital Need... Determinants of Working Capital Needs There are few factors that determine the firm's working capital needs. These factors are comprehensively enclosed with a Textbook of Busi

Contracting cost - agency costs, Contracting Cost - Agency Costs These... Contracting Cost - Agency Costs These are costs acquired in devising the contract between the shareholders and managers. The contract is drawn to ensure management act in t

Methods or techniques of financial forecasting, Methods or Techniques of Fi... Methods or Techniques of Financial Forecasting 1. Use of Cash Budgets A cash budget is a financial statement showing as: a) Sources of capital and revenue cash inflows

Spot rrates.., what is a spot rate curve what is a spot rate curve

Business finance, shares shares

Distribution policies and fiscal, Distribution Policies   ... Distribution Policies   Most Recent Fiscal Year Fiscal Year (-1) Fiscal Year (-2) Fiscal Year (-3)

Illustrates the roles of money, Illustrates the roles of money? Roles... Illustrates the roles of money? Roles of Money: a. A medium of exchange An asset which individuals obtain for the intention of trading quite than for their own consump

Significance of cost of finance, Significance of Cost of Finance The... Significance of Cost of Finance The cost of capital is Significance since of its application in the following areas as: i) Long-term investment decisions - In capital b

Accounting, The Morris Corporation has $ 600,000 of debt outstanding, and i... The Morris Corporation has $ 600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris’s annual sales are $# million, its average tax rate is 40% and its net