ABSTRACT
Ratios should be used with caution as they can be misleading if used in isola-
tion. Ratios may be used to identify questions about a company or its business.
Lenders also need to take into account, when reviewing company accounts, that assets are valued in those accounts on a ’going concern’ basis whereas in the case
of insolvency the assets are likely to realise only their ‘break up’ value.
