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Finance & Accounting
Pages 3 (753 words)
Ratio analysis Introduction The wider scope of accounting involves identification, quantification, recording, and communication of economic information to facilitate informed decisions among stakeholders. Raw information may however be bulky and disorganized for this role and financial accounting refines the information into financial statements.
Ratio analysis further simplifies the information and allows for a longitudinal and cross sectional analysis of an organization’s performance. I, in this paper, perform ratio analysis of IBM financial statements for the accounting period ending in the years 2010, 2011, and 2012, and discuss the computed ratios. Accounting ratios Ratio analysis compares different income statement and balance sheet items to determine liquidity, advantage, activity, profitability, and growth potentials. The following is a summary of applied formulae for computing different ratios. ...
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