Assignment Details
Financial Ratios
Consider the articles by Andrijasevic and Pasic (2014) and Mankin and Jewell (2014) assigned in this unit. Discuss the following questions on financial analysis. In addition, discuss why it is important to ask and answer these questions.
Why does the significance of financial ratios change according to industry or business practices?
Since ratios are often refined by analysts in their search for deeper insights, to what extent can ratio analysis be standardized?
How can financial ratios best be interpreted?
Measuring Financial Performance
INTRODUCTION
Measuring financial performance involves examining business activities and assessing their effects on financial condition. Central to this effort is the ability to analyze financial statements and projections in a manner that provides insight into both present and likely future conditions. Fortunately, there are a number of tools and approaches that aid in understanding the many relationships that drive changes in financial condition. In Unit 4, we will examine the use of financial ratios, common-sized analysis, and the DuPont model for analyzing and evaluating financial statements.
OBJECTIVES
To successfully complete this learning unit, you will be expected to:
Assess techniques and approaches to using ratios in financial analysis and forecasting.
Assess techniques for and approaches to using common-sized percentages in financial analysis and forecasting.
Assess techniques for and approaches to using the DuPont model in financial analysis and forecasting.
LEARNING ACTIVITIES
[u04s1] Unit 4 Study 1
Studies
Readings
Use the links provided to read the following:
Andrijasevic and Pasic’s 2014 article, “A Blueprint of Ratio Analysis as Information Basis of Corporate Financial Management [PDF],” in Problems of Management in the 21st Century, volume 9, issue 2, pages 117–124.
Mankin and Jewell’s 2014 article, “A Sorry State of Affairs: The Problems With Financial Ratio Education,” in Academy of Educational Leadership Journal, volume 18, issue 4, pages 195–219.
Optional Videos
Several activities in this unit involve the DuPont method of analysis. For tutorials on this topic, you may wish to view the following YouTube videos:
DuPont Analysis Part 1 | Transcript.
DuPont Analysis part 2 | Transcript.
