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Steps involved in ratio analysis
The following are the four steps involved in the ratio analysis:
1) selection of relevant data from the financial statement depending upon the objective of the analysis
2) calculation of appropriate ratios from the above data
3) Comparison of the calculation ratio with the ratios of the same firm in the past or the ratios developed from projected financial statement or the ratios of some other firms or the comparison with ratio of the industry to which the firm belongs.
4) Interpretation of the ratios.
The least-cost method The process is described as follows: Assign as much as possible to the variable with the least unit cost in the whole tableau. (Ties are broken randomly).
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company''s
accounting process or accounting cycle
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