Financial statement analysis assists the users of financial statements $($both internal and external$)$ in making informed decisions about a company$$s financial position$/$health$.$ But be cautious that analysis is based on the historical data and might not be a good indicator of future performance.

After reading the chapters for this week, respond to the following questions:

How can ratios be used to evaluate a firm$$s financial position and results of operations over a number of years? What types of analysis can be used other than ratio analysis? Identify and define two different ratios including the formulas and why management is interested in them?