Question
Agree or Disagree and Why? There are many techniques managers use to analyze financial statements. Besides horizontal and vertical analysis where managers compare current results
Agree or Disagree and Why? There are many techniques managers use to analyze financial statements. Besides horizontal and vertical analysis where managers compare current results to past results or to a base, there are is also ratio analysis, credit ratings, and even general news articles. Reading news articles is a good way to determine how a company is viewed externally and can give managers an opportunity to address public relations issues. Credit ratings are generally a good measure of the credit worthiness of the company. Ratio analysis uses readily available statistics from financial statements to develop ratios that further describe the firms operations, such as profitability and turnover ratios. Earnings Per Share (EPS) is a common ratio used to determine how well a firm is performing compared to the number of shares outstanding (Jiambalvo, 2016). While there are many ways to analyze an organization, it is generally best to use as many as possible to have a well-developed understanding. (Ch 14, John Fisher)
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