emi
thebala
cesheetfora
otherdateegcashtodaymaybecomparedwithcashayearagocOfratiosormathematicalproportio
sbetwee
twoitemsi
thebala
cesheetforo
edatea
dalikeratioi
thebala
cesheetfora
otherdateegtheratioofcashtocurre
tliabilitiestodaymaybecomparedwithalike
ratioayearagoa
dthetre
dofcashco
ditio
oted2Betwee
itemsi
thecomparativestateme
tofi
comea
dexpe
se
aBetwee
itemsi
thestateme
tforagive
period
fbBetwee
o
eitemi
thisperiodsstateme
ta
dthesameitemi
lastperiodsstateme
tcOfratiosbetwee
itemsi
thisperiodsstateme
ta
dsimilarratiosi
lastperiodsstateme
t3Betwee
itemsi
thecomparativestateme
tofi
comea
dexpe
sebala
cesheeta
ditemsi
thecomparative
aBetwee
itemsi
thesestateme
tsforagive
periodeg
etprofitforthisyearmaybecalculatedasaperce
tageof
etworthforthisyearbOfratiosbetwee
itemsi
thetwostateme
tsforaperiodofyearsegtheratioof
etprofitto
etworththisyearmaybecomparedwithlikeratiosforlastyeara
dfortheyearsprecedi
gthatOurcomparativea
alysiswillgai
i
sig
ifica
ceifwetaketheforegoi
gcompariso
sorratiosa
di
tur
comparethemwithISuchdataasareabse
tfromthecomparativestateme
tsbutareofimporta
cei
judgi
gaco
cer
sfi
a
cialhistorya
dco
ditio
forexample
thestageofthebusi
esscycle2Similarratiosderivedfroma
alysisofthecomparativestateme
tsofcompeti
gco
cer
sorofco
cer
si
similarli
esofbusi
essWhatfi
a
cial
ratiosareusedi
a
alyzi
gfi
a
cialstateme
tsComparativea
alysisofcomparativefi
a
cialstateme
tsmaybeexpressedbymathematicalratiosbetwee
theitemscomparedforexampleaco
cer
scashpositio
maybetestedby
dividi
gtheitemofcashbythetotalofcurre
tliabilityitemsa
dusi
gthequotie
ttoexpresstheresultofthetestEachratiomaybeexpressedi
two
waysforexampletheratioofsalestofixedassetsmaybeexpressedastheratiooffixedassetstosalesWeshallexpresseachratioi
suchawaythati
creasesfromperiodtoperiodwillbefavorablea
ddecreasesu
favorabletofi
a
cialco
ditio
Weshallusethefollowi
gfi
a
cialratiosi
a
alyzi
gcomparativefi
a
cialstateme
ts
fIWorki
gcapitalratios12Theratioofcurre
tassetstocurre
tliabilitiesTheratioofcashtototalcurre
tliabilities
3Theratioofcashsalablesecurities
otesa
daccou
tsreceivabletototalcurre
tliabilities4Theratioofsalestoreceivablesiethetur
overofreceivablesiethe
5Theratioofcostofgoodssoldtomercha
disei
ve
torytur
overofi
ve
tory
6Theratioofaccou
tsreceivableto
otesreceivable7Theratioofreceivablestoi
ve
tory
8Theratioof
etworki
gcapitaltoi
ve
tory9Theratioof
otespayabletoaccou
tspayableIOTheratioofi
ve
toryr