ABSTRACT

Although the term ‘ratio analysis’ is often used for the assessment of the above, a better term would be the use of ‘key performance indicators’, as many of the techniques provide information in percentage or other terms and not in the form of ratios. When using information obtained from a company’s annual report, any results must be treated with caution. Different companies will adopt different accounting policies and so inter-company comparison may be difficult. A company’s Statement of Financial Position (Balance Sheet) represents a picture of the situation on one particular day, and the picture might be quite different in, say, a month’s time.