ABSTRACT
To gain an understanding of a firm's financial position we will essentially seek to find answers to four key questions which we use to develop a general framework for financial analysis:
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1 profitability; 2 liquidity; 3 operating efficiency; 4 capital structure (gearing)
Two of the key outcomes which the analyst will hope to achieve from the analysis is an assessment of the firm's level of return and its level of risk. Recall from preceding chapters that the concepts of risk and return are intimately connected. There exists a positive correlation between them and you cannot look at either in isolation, seeking higher returns usually means accepting higher risk and vice versa.
