Yard stick required in ratio analysis, Finance Basics

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







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
Related Questions
Critize the flexible exchange rate regime from the viewpoint of the proponents of the fixed exchange rate regime

The operating and cost data of ABC Ltd. are: Sales Rs. 20,00,000 Vari

1. Find the price of the following bonds. They are all risk-free, and the risk-free rate is 10%. (a) A fifteen-year zero coupon bond with face value $1,000. (b) A three year

Explain about the New Issue Market OR Primary Market New issue market is the segment in which new issues are made. In new issue market, new issues may be made in 3 ways name

what will happen to the loss on account of premium redemption of debenture through sinking fund? Where do i close this account to?

Advantages of Bonus Matter a) Tax advantages         Shareholders can sell new shares, and create cash in form of capital gains such is tax exempt unlike cash dividends wh

Primary Markets - Financial Markets These are markets such deal along with securities that have been issued for the first moment. The money flows directly from transferor or t

Determinants of Required Rate of Return 1.Risk free rate - This is the interest rate such would exist on default free securities like Treasury bills and bonds. Risk free

Objectives or Goals of Business 1. Profit maximization - This is a traditional and a cardinal objective of a business.  This is so for the following purpose: To

Illustrate the Advantages of Underwriting Underwriting presumes great significance as it offers the below benefits to the issuing company: (i) Issuing company is relied f