Professional Documents
Culture Documents
14
CHAPTER II
information 3 .
2. Trend analysis
4. Ratio analysis
ganisation.
TREND ANALYSIS :
statement bears to the same item in the base year. The infor-
is taken as the base year. The figures of base year are taken
as 100 and trend ratios for the subsequent years are calculated
COMMON-SIZE STATEMENTS :
age of sales and a common size balance sheet shows each item
RATIO ANALYSIS :
RATIO :
profitability9.
of time/
figures together.
and even goes below one, it may indicate that the liqui-
problems.
MERITS :
future needs.
statements.
future.
1. PROFITABILITY RATIOS :
2. SOLVENCY RATIOS :
cy of the company.
which funds are obtained and uses to which they have been applied.
1. Operations of business
4. Subscription by shareholders
the flow of funds between various assets and equity items during
ing period.
irreconcilable situations.
manner.
LIMITATIONS :
change or status.
from the two balance sheets deals with the past and becomes
historical in nature.
business unit.
33
period and the net effect of their changes between two periods