Question
The purpose of financial ratio analysis is so companies are able to compare their standing to previous years, other companies and what to expect the
The purpose of financial ratio analysis is so companies are able to compare their standing to previous years, other companies and what to expect the following year. When speaking in terms of what can be labeled "good" or "bad" depends on the internal and external factors. Take into consideration this year alone. With the pandemic there are many different performance evaluations that are no longer as important as they were this time last year. For example, last year companies were not forced to stockpile cash, but due to the crisis they need to because "it provides flexibility in an uncertain environment, protecting against further crises". With that being said, cash on hand is able to determine the worth of a company. The worth of the company this time last year played into how well they are doing for themselves, but did not necessarily create a security blanket that they now need.
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Q1. why financial ratios have less significant than cash stockpile compare to 2019 and 2020
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