Title:

A Short History of Financial Ratio Analysis.

Authors:
Horrigan, James O.1
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Accounting Review; Apr68, Vol. 43 Issue 2, p284-294, 11p

Article

*RATIO analysis
*ACCOUNTING
*DATA analysis
*ACCOUNTING methods
*INDUSTRIALIZATION
*FINANCIAL statements
*ECONOMIC sectors
HISTORY

UNITED States

926110 Administration of General Economic Programs

In this article, the author focuses on the use of accounting data by accountants,
particularly on the use of financial ratio analysis, followed from its early origins to the
present time. Only the broad outline of this development is presented and the
discussions is centered upon general analytical approaches or individuals. According
to the author the first causes of financial statement analysis can be traced back to
the last stages of America's drive to industrial maturity in the last half of the
nineteenth century. As the management of enterprises in the various industrial
sectors transferred from the enterprising capitalists to the professional manager and
as the financial sector became a more predominate force in the economy, the need
for financial statements increased accordingly. Although there was much overlap, the
development paths of ratio analysis for creditor purposes and for managerial
purposes were different. After the turn of the century, some important developments
in ratio analysis occurred during the period prior to and during World War I.
1
Assistant Professor of Business Administration, University of New Hampshire.
ISSN:
0001-4826