Because of the diversity of users, their different levels of knowledge, the varying information needs for particular decisions, and the general nature of financial statements, a variety of analysis techniques have been developed.

Explain the ratio method of analysis and how this technique appears to provide the most relevant information in a given situation.

Discuss 4 ratios of your choice in terms of the users, objectives, decisions and outcomes of the selected ratios.

Select a company of your choice and calculate 4 ratios based on data extracted from the financial statements. Briefly explain the interpretation of the result.

Note: Objectives of Ratio Analysis as suggested earlier; various users approach financial statement analysis with many different objectives.