• Financial Ratio
    judgement. 262 5th International Conference on Management, Enterprise and Benchmarking June 1-2, 2007 Budapest, Hungary 4 Seasonal factors can also distort ratio analysis. For example, the inventory turnover ratio for a food processor will be different if the balance sheet figure used for...
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  • Wonders
    employed by firms to make their financial statements look better than they really are. Seasonal factors can distort ratio analysis. At certain times of the year a firm may have excessive inventories in preparation of a “season” of high demand. Therefore an inventory turnover ratio taken at this...
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  • Research
    . “Average” performance is not necessarily good. 6. Seasonal factors can distort ratios. 7. “Window dressing” techniques can make statements and ratios look better. 8. Inflation has badly distorted many firms’ balance sheets, so a ratio analysis for one firm over time...
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  • Solution Task Financial Management
    look better. 8. Inflation has badly distorted many firms’ balance sheets, so a ratio analysis for one firm over time, or a comparative analysis of firms of different ages, must be interpreted with judgment. l. Top analysts recognize that certain qualitative factors must be...
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  • Analysis of Financial Statements 7
    depreciation charges, inventory costs, and therefore, the value of both balance sheet items and net income. For this reason, the analysis of a firm over time, or a comparative analysis of firms of different ages, can be misleading. Ratios may be distorted by seasonal factors, or manipulated by...
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  • Everelite Case Study
    limitations of it. Seasonal factors can distort ratios, Window dressing techniques can make statements and ratios look better. Different operating and accounting practices distort comparisons. Sometimes, it is hard to tell if ratio is “good” or “bad.” 12. What are some qualitative factors that...
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  • Integrated Case
    of financial ratio analysis? Answer: [Show S4-33 and S4-34 here.] Some potential problems are listed below: 1. Comparison with industry averages is difficult if the firm operates many different divisions. 2. Different operating and accounting practices distort comparisons. 3. 4. Sometimes hard to...
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  • Ratio Analysis
    set the range of possible values for a company's common stock. With the capitalization of earnings and intrinsic value methods, ratio analysis techniques can be helpful in getting a feel for a company Ts risk characteristics and the appropriateness of different capitalization rates. In any...
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  • Oeun Penh
    profit margin times the total assets turnover. h. Window dressing is a technique employed by firms to make their financial statements look better than they really are. Seasonal factors can distort ratio analysis. At certain times of the year a firm may have excessive inventories in preparation...
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  • Financial Management
    leverage. • Explain “benchmarking” and its purpose. • List several limitations of ratio analysis. • Identify some of the problems with ROE that can arise when firms use it as a sole measure of performance. • Identify some of the qualitative factors that must be considered...
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  • Growing Pains: Cekap Automobile Parts
    in other words, has a problem with liquidity. It is obviously shown in quick ratio analysis that the ratio is decreased from 2004 to 2007 by 59.04%. But through current ratio analysis, it shows that the company is increasing in this ratio by 6.35% from 2007 compared to 2004. The company might have...
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  • Financial Statement Analysis Solution Chapter 1
    different times, with the result that ratios can change over time even though underlying factors do not. For example, a plant constructed in 1980 and running at full capacity ever since might be blindly compared to, say, year 2002 dollar sales in computing a sales to gross plant ratio. Moreover, once...
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  • Economics of Production
    interest to economic planners of any country. • Discuss the problems and opportunities which rapid population growth poses for an economy. • Show how the demand for goods and services is different from the demand for factor services. • Explain the various theories of wage determination...
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  • Case Study Finance
    PROPOSED EXPANSION ON THE FIRM’S OPERATIONS. HAD THE RATIO ANALYSIS BEEN CONDUCTED, THE COMPANY WOULD HAVE “GOTTEN ITS HOUSE IN ORDER” BEFORE UNDERGOING THE EXPANSION. L. WHAT ARE SOME POTENTIAL PROBLEMS AND LIMITATIONS OF FINANCIAL RATIO ANALYSIS...
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  • Economics
    difficulty facing the compiler of index number is to decide on how much of each commodity to select. This is the problem of weighting. Different “weights” will yield different results, as the following example illustrates. Assume that there are only three commodities, A, B, C and the prices of which...
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  • Financial
    .5. The average performance is not necessarily good. 6.Seasonal factors can distort ratios. 7. The window dressing techniques can make statements and ratios look better.8. Inflation has badly distorted many firms’ balance sheets, so a ratio analysis for one firm over time, or a comparative analysis...
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  • Financial Ratios
    Financial Ratio Analysis It is difficult to infer organizational perfor mance from one or two simple numbers.  Nevertheless, in practice a num ber of different ratios are often calculated in strategic planning endeavors and, taken as a whole and with some caution, these ratios do provide some...
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  • Chapter 3 Analysis of Financial Statement
    EXPANSION. L. WHAT ARE SOME POTENTIAL PROBLEMS AND LIMITATIONS OF FINANCIAL RATIO ANALYSIS? ANSWER: [SHOW S3-35 AND S3-36 HERE.] SOME POTENTIAL PROBLEMS ARE LISTED BELOW: 1. COMPARISON WITH INDUSTRY AVERAGES IS DIFFICULT IF THE FIRM OPERATES MANY DIFFERENT DIVISIONS. 2. DIFFERENT OPERATING...
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  • Acca Notes
    looked at how to formulate a problem and in the next section we will look at solving a problem using graphs. 104 4: Limiting factor analysis ⏐ Part B Decision-making techniques 5 Graphing the model FAST FORWARD 6/08 A graphical solution is only possible when there are two variables in...
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  • Ffm9im3
    EXPANSION. L. WHAT ARE SOME POTENTIAL PROBLEMS AND LIMITATIONS OF FINANCIAL RATIO ANALYSIS? ANSWER: [SHOW S3-37 THROUGH S3-39 HERE.] SOME POTENTIAL PROBLEMS ARE LISTED BELOW: 1. COMPARISON WITH INDUSTRY AVERAGES IS DIFFICULT IF THE FIRM OPERATES MANY DIFFERENT DIVISIONS. 2. DIFFERENT...
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