About 'leverage ratios analysis'|...of such products would open new markets in which CESV will be able to leverage its superior quality and experience. Any evaluation of CESV ought to include an evaluation...

About 'leverage ratios analysis'|...of such products would open new markets in which CESV will be able to leverage its superior quality and experience. Any evaluation of CESV ought to include an evaluation...

Ｆｉｎａｎｃｉａｌ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｉｓ               ｐｅｒｈａｐｓ               ｔｈｅ               ｏｌｄｅｓｔ               ａｎｄ               ｍｏｓｔ               ｅｓｓｅｎｔｉａｌ               ｔｏｏｌ               ｕｓｅｄ               ｔｏ               ｅｖａｌｕａｔｅ               ａ               ｃｏｍｐａｎｙ'ｓ               ｃｒｅｄｉｔ               ｐｏｓｉｔｉｏｎ               ａｎｄ               ｏｖｅｒａｌｌ               ｆｉｎａｎｃｉａｌ               ｐｅｒｆｏｒｍａｎｃｅ. Ｆｉｎａｎｃｉａｌ               ｓｔａｔｅｍｅｎｔｓ               ｏｆ               ａ               ｃｏｍｐａｎｙ               ｇｅｎｅｒａｔｅ               ａ               ｌａｒｇｅ               ｎｕｍｂｅｒ               ｏｆ               ｒａｔｉｏｓ               ｗｈｉｃｈ               ａｎａｌｙｓｔｓ               ｕｓｅ               ｄｅｐｅｎｄｉｎｇ               ｏｎ               ｔｈｅ               ｃｏｍｐａｎｙ'ｓ               ａｃｔｉｖｉｔｙ               ｏｒ               ｐｕｒｐｏｓｅ               ｏｆ               ａｎａｌｙｓｉｓ. Ａｌｔｈｏｕｇｈ               ｔｈｅ               ａｐｐｌｉｃａｔｉｏｎ               ｏｆ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｉｓ               ｗｉｄｅｓｐｒｅａｄ,               ｉｔ               ｐｏｓｅｓ               ｉｎｈｅｒｅｎｔ               ｌｉｍｉｔａｔｉｏｎｓ. Ｔｈｅ               ａｒｔｉｃｌｅ               ｏｕｔｌｉｎｅｓ               ｔｈｅ               ｒａｔｉｏ               ｇｒｏｕｐｓ               ａｎｄ               ｔｈｅ               ｂｅｎｅｆｉｔｓ               ｏｆ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ａｎｄ               ｅｘｐｌｏｒｅｓ               ｉｔｓ               ｌｉｍｉｔａｔｉｏｎｓ               ｔｏ               ｄｅｃｉｄｅ               ｉｆ               ｆｉｎａｎｃｉａｌ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｉｓ               ａｎ               ｅｆｆｅｃｔｉｖｅ               ｔｏｏｌ.                Ｆｉｎａｎｃｉａｌ               Ｒａｔｉｏｓ                Ｍｏｓｔ               ａｎａｌｙｓｔｓ               ｃｌａｓｓｉｆｙ               ｒａｔｉｏｓ               ｉｎｔｏ               ｆｏｕｒ               ｇｒｏｕｐｓ:               ｌｉｑｕｉｄｉｔｙ,               ａｃｔｉｖｉｔｙ,               ｄｅｂｔ,               ａｎｄ               ｐｒｏｆｉｔａｂｉｌｉｔｙ               ｒａｔｉｏｓ.                Ｌｉｑｕｉｄｉｔｙ               ｒａｔｉｏｓ:               Ｔｈｅｙ               ａｓｓｅｓｓ               ａ               ｃｏｍｐａｎｙ'ｓ               ａｂｉｌｉｔｙ               ｔｏ               ｒｅｐａｙ               ｉｔｓ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔ. Ｃｕｒｒｅｎｔ               ｒａｔｉｏｓ               ｉｎｖｏｌｖｉｎｇ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ａｎｄ               ｃｕｒｒｅｎｔ               ｌｉａｂｉｌｉｔｉｅｓ               ｆｏｒｍ               ｐａｒｔ               ｏｆ               ｌｉｑｕｉｄｉｔｙ               ｒａｔｉｏｓ.                Ａｃｔｉｖｉｔｙ               ｒａｔｉｏｓ:               Ｔｈｅｙ               ｍｅａｓｕｒｅ               ｔｈｅ               ｃｏｍｐａｎｙ'ｓ               ａｂｉｌｉｔｙ               ｔｏ               ｃｏｎｖｅｒｔ               ｉｔｓ               ｂａｌａｎｃｅ               ｓｈｅｅｔ               ａｃｃｏｕｎｔｓ               ｉｎｔｏ               ｃａｓｈ. Ｔｈｅ               ｖａｌｕｅｓ               ａｓｓｅｓｓ               ｔｈｅ               ｅｆｆｉｃｉｅｎｃｙ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ. Ｒａｔｉｏｓ               ｉｎ               ｔｈｉｓ               ｇｒｏｕｐ               ｉｎｃｌｕｄｅ               ｉｎｖｅｎｔｏｒｙ               ｔｕｒｎｏｖｅｒ,               ａｓｓｅｔｓ               ｔｕｒｎｏｖｅｒ,               ｅｔｃ.                Ｄｅｂｔ               ｒａｔｉｏｓ:               Ｔｈｅｙ               ａｓｓｅｓｓ               ａ               ｃｏｍｐａｎｙ'ｓ               ｌｅｖｅｒａｇｅ               ｌｅｖｅｌｓ               ａｎｄ               ｃｏｎｓｅｑｕｅｎｔ               ｐｏｔｅｎｔｉａｌ               ｒｉｓｋｓ. Ｒａｔｉｏｓ               ｉｎ               ｔｈｉｓ               ｇｒｏｕｐ               ｉｎｃｌｕｄｅ               ｄｅｂｔ-ｅｑｕｉｔｙ,               ｄｅｂｔ-ａｓｓｅｔｓ,               ｉｎｔｅｒｅｓｔ               ｍａｒｇｉｎ,               ｅｔｃ.                Ｐｒｏｆｉｔａｂｉｌｉｔｙ               ｒａｔｉｏｓ:               Ｔｈｅｙ               ｍｅａｓｕｒｅ               ａ               ｃｏｍｐａｎｙ'ｓ               ｐｅｒｆｏｒｍａｎｃｅ               ｉｎ               ｔｅｒｍｓ               ｏｆ               ｉｔｓ               ａｂｉｌｉｔｙ               ｔｏ               ｇｅｎｅｒａｔｅ               ｒｅｖｅｎｕｅｓ. Ｒａｔｉｏｓ               ｉｎ               ｔｈｉｓ               ｇｒｏｕｐ               ｉｎｃｌｕｄｅ               ＲＯＡ,               ＲＯＩ,               ｎｅｔ               ｐｒｏｆｉｔ               ｍａｒｇｉｎ,               ｅｔｃ.                Ｂｅｎｅｆｉｔｓ               ｏｆ               Ｒａｔｉｏ               Ａｎａｌｙｓｉｓ                Ｓｉｍｐｌｅ               ａｎｄ               ｓｔｒａｉｇｈｔｆｏｒｗａｒｄ               -               Ｉｔ               ｉｓ               ｅａｓｙ               ｔｏ               ｃａｌｃｕｌａｔｅ               ｒａｔｉｏｓ               ａｎｄ               ａｒｒｉｖｅ               ａｔ               ｕｓｅｆｕｌ               ｉｎｆｏｒｍａｔｉｏｎ               ａｔ               ａｎ               ｉｎｓｔａｎｔ. Ｃａｌｃｕｌａｔｉｎｇ               ｔｈｅ               ｒａｔｉｏｓ               ｉｎｖｏｌｖｅｓ               ｔｈｅ               ｓｔｒａｉｇｈｔｆｏｒｗａｒｄ               ｕｓｅ               ｏｆ               ｔｈｅ               ｎｕｍｂｅｒｓ               ｆｒｏｍ               ａ               ｃｏｍｐａｎｙ'ｓ               ｆｉｎａｎｃｉａｌ               ｓｔａｔｅｍｅｎｔｓ.                Ｃｏｍｐａｒｉｓｏｎｓ               -               Ｉｔ               ｉｓ               ｐｏｓｓｉｂｌｅ               ｔｏ               ｃｏｍｐａｒｅ               ｒａｔｉｏｓ               ｏｖｅｒ               ｄｉｆｆｅｒｅｎｔ               ｔｉｍｅ               ｐｅｒｉｏｄｓ,               ｃｏｍｐａｎｉｅｓ,               ａｎｄ               ｉｎｄｕｓｔｒｙ. Ａｂｉｌｉｔｙ               ｔｏ               ｃｏｍｐａｒｅ               ｐｒｏｖｉｄｅｓ               ｉｎｆｏｒｍａｔｉｏｎ               ａｎｄ               ａｎａｌｙｓｉｓ               ｏｎ               ｔｒｅｎｄｓ               ｗｉｔｈｉｎ               ｔｈｅ               ｃｏｍｐａｎｙ               ａｎｄ               ｔｈｅ               ｉｎｄｕｓｔｒｙ. Ｓｕｃｈ               ｃｏｍｐａｒｉｓｏｎｓ               ａｌｓｏ               ｐｒｏｖｉｄｅ               ｉｎｆｏｒｍａｔｉｏｎ               ｆｏｒ               ｄｅｃｉｓｉｏｎｓ               ｏｎ               ｆｉｎａｎｃｉａｌ               ｇｏａｌｓ               ａｎｄ               ｃｒｉｔｉｃａｌ               ｔｏ               ｓｕｃｃｅｓｓ               ｆａｃｔｏｒｓ.                Ｆｏｒｅｃａｓｔｉｎｇ               -               Ｃｏｍｐａｎｉｅｓ               ａｎａｌｙｚｅ               ｒａｔｉｏｓ               ｔｏ               ｆｏｒｅｃａｓｔ               ｄｅｃｉｓｉｏｎｓ               ｏｎ               ｅｘｐａｎｓｉｏｎｓ. Ｆｏｒ               ｅｘａｍｐｌｅ,               ｃｏｍｐａｎｉｅｓ               ｗｉｌｌ               ｆｏｒｅｃａｓｔ               ｔｈｅ               ｃｏｓｔｓ               ｏｆ               ｆｕｔｕｒｅ               ｐｒｏｊｅｃｔｓ               ｄｅｐｅｎｄｉｎｇ               ｏｎ               ｔｈｅｉｒ               ａｂｉｌｉｔｙ               ｔｏ               ｐａｙ               ｏｆｆ               ｓｈｏｒｔ-ｔｅｒｍ               ｏｂｌｉｇａｔｉｏｎｓ. Ｌｉｑｕｉｄｉｔｙ               ｒａｔｉｏｓ               ａｓｓｅｓｓ               ｔｈｅ               ａｂｉｌｉｔｙ.                Ｄｉｓｃｉｐｌｉｎｅ               -               Ｐｒｏｆｉｔａｂｉｌｉｔｙ               ｒａｔｉｏｓ,               ｗｈｉｃｈ               ｅｖａｌｕａｔｅ               ａ               ｃｏｍｐａｎｙ'ｓ               ｐｅｒｆｏｒｍａｎｃｅ               ａｌｓｏ               ｉｍｐｌｉｅｓ               ｔｈｅ               ｅｖａｌｕａｔｉｏｎ               ｏｆ               ｉｔｓ               ｍａｎａｇｅｒｓ'               ｐｅｒｆｏｒｍａｎｃｅｓ. Ａｎ               ｉｎｄｉｒｅｃｔ               ｒｅｓｕｌｔ               ｏｆ               ｔｈｅ               ｒａｔｉｏｓ               ｉｓ               ｍａｋｉｎｇ               ｔｈｅ               ｍａｎａｇｅｒｓ               ａｄｈｅｒｅ               ｔｏ               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｇｏａｌｓ               ａｎｄ               ｔｈｕｓ,               ｄｉｓｃｉｐｌｉｎｅ               ｔｈｅｍ.                Ｌｉｍｉｔａｔｉｏｎｓ               ｏｆ               Ｒａｔｉｏ               Ａｎａｌｙｓｉｓ                Ｆｏｒ               ｍａｎｙ               ｙｅａｒｓ,               ａｎａｌｙｓｔｓ               ｈａｖｅ               ｂｅｅｎ               ｕｓｉｎｇ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ａｓ               ｔｈｅ               ｅｓｔａｂｌｉｓｈｅｄ               ｔｅｃｈｎｉｑｕｅ               ｔｏ               ａｎａｌｙｚｅ,               ｃｏｍｐａｒｅ               ａｎｄ               ｆｏｒｅｃａｓｔ               ｃｏｍｐａｎｙ               ｐｅｒｆｏｒｍａｎｃｅｓ. Ｈｏｗｅｖｅｒ,               ｅｖｅｎ               ｓｕｃｈ               ｅｓｔａｂｌｉｓｈｅｄ               ｍｅｔｈｏｄｓ               ｈａｖｅ               ｉｎｈｅｒｅｎｔ               ｌｉｍｉｔａｔｉｏｎｓ.                Ａｃｃｏｕｎｔｉｎｇ               ｐｏｌｉｃｉｅｓ:               Ａｃｃｏｕｎｔｉｎｇ               ｌａｗｓ               ａｌｌｏｗ               ｃｏｍｐａｎｉｅｓ               ｔｏ               ｃｈｏｏｓｅ               ａｃｃｏｕｎｔｉｎｇ               ｐｏｌｉｃｉｅｓ               ａｎｄ               ｕｓｅ               ｄｉｓｃｒｅｔｉｏｎ               ｗｈｉｌｅ               ｐｒｅｐａｒｉｎｇ               ａｃｃｏｕｎｔｓ. Ｓｕｃｈ               ａ               ｆｒｅｅｄｏｍ               ｌｅａｄｓ               ｔｏ               ｄｉｆｆｅｒｅｎｃｅｓ               ｉｎ               ｔｈｅ               ａｃｃｏｕｎｔｓ               ｏｆ               ｃｏｍｐａｎｉｅｓ,               ｗｈｉｃｈ               ｉｎ               ｔｕｒｎ               ｄｉｓｔｏｒｔｓ               ｉｎｔｅｒ               ｃｏｍｐａｎｙ               ｃｏｍｐａｒｉｓｏｎｓ. (ＬＩＦＯ               ｖｅｒｓｕｓ               ＦＩＦＯ,               ｐｕｒｃｈａｓｉｎｇ               ｅｑｕｉｐｍｅｎｔ               ｖｅｒｓｕｓ               ｌｅａｓｉｎｇ,               ｅｔｃ)               Ｏｕｔｄａｔｅｄ               ｉｎｆｏｒｍａｔｉｏｎ:               Ｆｉｎａｎｃｉａｌ               ｓｔａｔｅｍｅｎｔｓ               ｈａｖｅ               ｏｕｔｄａｔｅｄ               ｆｉｇｕｒｅｓ. Ｈｅｎｃｅ,               ｔｈｅｙ               ｄｏ               ｎｏｔ               ｉｎｄｉｃａｔｅ               ａ               ｃｏｍｐａｎｙ'ｓ               ｃｕｒｒｅｎｔ               ｐｏｓｉｔｉｏｎ. Ｍｏｒｅｏｖｅｒ,               ｔｈｅ               ｂａｌａｎｃｅ               ｓｈｅｅｔ,               ｗｈｉｃｈ               ｉｓ               ａ               ｓｎａｐｓｈｏｔ               ｏｆ               ａ               ｃｏｍｐａｎｙ'ｓ               ｆｉｎａｎｃｉａｌ               ｐｏｓｉｔｉｏｎ               ａｔ               ａ               ｐａｒｔｉｃｕｌａｒ               ｔｉｍｅ,               ｗｉｌｌ               ｎｏｔ               ｃａｐｔｕｒｅ               ｉｔ               ｆｏｒ               ｔｈｅ               ｗｈｏｌｅ               ｙｅａｒ. Ｉｆ               ａ               ｃｏｍｐａｎｙ               ｈａｓ               ａ               ｓｅａｓｏｎａｌ               ｂｕｓｉｎｅｓｓ               ｗｈｅｒｅｉｎ               ｔｈｅ               ｙｅａｒ-ｅｎｄ               ｃｏｉｎｃｉｄｅｓ               ｗｉｔｈ               ａ               ｌｏｗ               ｂｕｓｉｎｅｓｓ               ａｃｔｉｖｉｔｙ,               ｔｈｅ               ｂａｌａｎｃｅ               ｓｈｅｅｔ               ｍａｙ               ｐｒｅｓｅｎｔ               ａ               ｌｏｗ               ｆｉｇｕｒｅ               ｏｎ               ｓｔｏｃｋｓ               ａｎｄ               ｄｅｂｔｏｒｓ. Ｃｒｅａｔｉｖｅ               ａｃｃｏｕｎｔｉｎｇ:               Ｃｏｍｐａｎｉｅｓ               ｔｅｎｄ               ｔｏ               ｐｒｅｓｅｎｔ               ｉｎｆｌａｔｅｄ               ｒｅｖｅｎｕｅｓ               ａｎｄ               ｒｅｄｕｃｅｄ               ｌｉａｂｉｌｉｔｉｅｓ               ｏｎ               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｓｔａｔｅｍｅｎｔｓ. Ｉｎ               ｐａｒｔｉｃｕｌａｒ,               ｔｈｅｙ               ｔｅｎｄ               ｔｏ               ｗｉｎｄｏｗ               ｄｒｅｓｓ               ｄｕｒｉｎｇ               ｅａｒｎｉｎｇｓ               ｒｅｓｕｌｔｓ               ｓｅａｓｏｎｓ. Ｔｈｅｓｅ               ｔｒｉｃｋｓ               ｍａｋｅ               ｉｎｖｅｓｔｏｒｓ               ｂｅｌｉｅｖｅ               ｔｈａｔ               ｃｏｍｐａｎｉｅｓ               ｈａｖｅ               ａ               ｓｔｒｏｎｇ               ｆｉｎａｎｃｉａｌ               ｐｏｓｉｔｉｏｎ. Ｈｏｗｅｖｅｒ,               ｓｕｃｈ               ｃｒｅａｔｉｖｅ               ａｃｃｏｕｎｔｉｎｇ               ｍｉｓｌｅａｄｓ               ａｎａｌｙｓｔｓ               ｕｓｉｎｇ               ｆｉｎａｎｃｉａｌ               ａｃｃｏｕｎｔｉｎｇ               ａｎｄ               ｒａｔｉｏｓ. Ｉｎｔｅｒｐｒｅｔｉｎｇ               ｒａｔｉｏｓ:               Ａｌｔｈｏｕｇｈ               ｔｈｅｒｅ               ａｒｅ               ｓｔａｎｄａｒｄ               ｒｕｌｅｓ               ｆｏｒ               ｉｎｔｅｒｐｒｅｔｉｎｇ               ｒａｔｉｏｓ,               ａｎａｌｙｓｉｓ               ｉｓ               ｎｏｔ               ｃｏｍｐｌｅｔｅ               ｗｉｔｈｏｕｔ               ｆｏｌｌｏｗｉｎｇ               ａ               ｄｅｅｐｅｒ               ｕｎｄｅｒｓｔａｎｄｉｎｇ               ｏｎ               ｈｏｗ               ｔｏ               ｉｎｔｅｒｐｒｅｔ               ｒａｔｉｏｓ. Ｆｏｒ               ｅｘａｍｐｌｅ,               ｉｎｔｅｒｐｒｅｔｉｎｇ               ａ               ｈｉｇｈ               ｌｉｑｕｉｄｉｔｙ               ｒａｔｉｏ               ａｓ               ｐｏｓｉｔｉｖｅ               ｉｓ               ｃｏｍｍｏｎ               ａｓ               ｉｔ               ｓｉｇｎｉｆｉｅｓ               ｔｈｅ               ａｂｉｌｉｔｙ               ｏｆ               ａ               ｃｏｍｐａｎｙ               ｔｏ               ｐａｙ               ｉｔｓ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔｓ. Ｈｏｗｅｖｅｒ,               ｔｈｅ               ｃｏｍｐａｎｙ               ｌｏｓｅｓ               ｏｕｔ               ｏｎ               ｔｈｅ               ｏｐｐｏｒｔｕｎｉｔｙ               ｃｏｓｔ               ｏｆ               ｈｏａｒｄｉｎｇ               ｅｘｃｅｓｓｉｖｅ               ｃａｓｈ. Ｉｆ               ｐｕｔ               ｔｏ               ｐｒｏｄｕｃｔｉｖｅ               ｕｓｅ               ｏｒ               ｉｎｖｅｓｔｍｅｎｔｓ,               ｔｈｅ               ｃａｓｈ               ｐｉｌｅ               ｗｉｌｌ               ｐｒｏｖｉｄｅ               ｂｅｔｔｅｒ               ｙｉｅｌｄｓ. Ｓｉｍｉｌａｒｌｙ,               ｉｔ               ｉｓ               ｐｏｓｓｉｂｌｅ               ｔｏ               ｉｎｔｅｒｐｒｅｔ               ａ               ｈｉｇｈ               ｄｅｂｔ               ｒａｔｉｏ               ａｓ               ｌｏａｎｓ               ｕｓｅｄ               ｆｏｒ               ｇｒｏｗｔｈ               ｏｒ               ｌｏａｎｓ               ｕｓｅｄ               ｉｎｅｆｆｉｃｉｅｎｔｌｙ               ａｎｄ               ｔｈｕｓ,               ｕｎａｂｌｅ               ｔｏ               ｒｅｐａｙ. Ｉｎｆｌａｔｉｏｎ:               Ｉｎｆｌａｔｉｏｎ               ｄｉｓｔｏｒｔｓ               ｐｅｒｆｏｒｍａｎｃｅ               ｃｏｍｐａｒｉｓｏｎｓ. Ａ               ｃｏｍｐａｒｉｓｏｎ               ｏｆ               ｆｉｎａｎｃｉａｌ               ｒｅｓｕｌｔｓ               ｏｖｅｒ               ｔｉｍｅ               ｉｓ               ｍｉｓｌｅａｄｉｎｇ               ａｓ               ｔｈｅ               ｆｉｇｕｒｅｓ               ａｒｅ               ｎｏｔ               ｄｉｒｅｃｔｌｙ               ｃｏｍｐａｒａｂｌｅ. Ｔｈｅ               ｉｎｃｏｍｅ               ｓｔａｔｅｍｅｎｔ               ｍａｙ               ｐｒｅｓｅｎｔ               ｉｎｃｒｅａｓｅｄ               ｒｅｖｅｎｕｅｓ               ａｎｄ               ｎｅｔ               ｐｒｏｆｉｔ               ｉｎｄｉｃａｔｉｎｇ               ｉｍｐｒｏｖｅｍｅｎｔ               ｉｎ               ｆｉｎａｎｃｉａｌ               ｐｅｒｆｏｒｍａｎｃｅ. Ｈｏｗｅｖｅｒ,               ｉｎｆｌａｔｉｏｎ               ａｎｄ               ｎｏｔ               ｉｍｐｒｏｖｅｄ               ｓａｌｅｓ               ｍａｙ               ｈａｖｅ               ｂｏｏｓｔｅｄ               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｆｉｇｕｒｅｓ. Ｄｉｆｆｅｒｅｎｔ               ｒｉｓｋ               ｐｒｏｆｉｌｅｓ:               Ｃｏｍｐａｎｉｅｓ               ｈａｖｅ               ｄｉｆｆｅｒｅｎｔ               ｆｉｎａｎｃｉａｌ               ａｎｄ               ｍａｒｋｅｔ               ｒｉｓｋ               ｐｒｏｆｉｌｅｓ. Ｄｉｆｆｅｒｅｎｃｅｓ               ｉｎ               ｔｙｐｅｓ               ｏｆ               ｍａｒｋｅｔ,               ｃｏｍｐｅｔｉｔｉｖｅ               ｉｎｔｅｎｓｉｔｙ,               ａｎｄ               ｇｏｖｅｒｎｍｅｎｔａｌ               ｉｎｔｅｒｆｅｒｅｎｃｅ               ｃａｕｓｅ               ｔｈｅ               ｄｉｆｆｅｒｅｎｃｅ               ｉｎ               ｒｉｓｋ               ｐｒｏｆｉｌｅｓ. Ｃｏｍｐａｎｉｅｓ               ｉｎ               ｔｈｅ               ｓａｍｅ               ｉｎｄｕｓｔｒｙ               ａｌｓｏ               ｆａｃｅ               ｄｉｆｆｅｒｅｎｔ               ｆｉｎａｎｃｉａｌ               ａｎｄ               ｍａｒｋｅｔ               ｒｉｓｋｓ. Ｃｏｍｐａｒｉｎｇ               ｕｓｉｎｇ               ｒａｔｉｏｓ               ｍａｙ               ｍｉｓｌｅａｄ               ｔｈｅ               ｉｎｆｅｒｅｎｃｅｓ               ａｂｏｕｔ               ｔｈｅｍ. Ｆｏｒ               ｅｘａｍｐｌｅ,               ａ               ｃｏｍｐａｎｙ               ｗｉｔｈ               ａ               ｌｏｗ               ｄｅｂｔ               ｒａｔｉｏ               ｍａｙ               ｉｎｄｉｃａｔｅ               ｉｍｐｒｏｖｅｄ               ｆｉｎａｎｃｉａｌ               ｐｏｓｉｔｉｏｎ. Ｈｏｗｅｖｅｒ,               ｂａｎｋｓ               ｍａｙ               ｎｏｔ               ｈａｖｅ               ｐｒｏｖｉｄｅｄ               ｌｏａｎｓ               ｔｏ               ｔｈｅ               ｃｏｍｐａｎｙ               ｏｗｉｎｇ               ｔｏ               ｔｈｅ               ｃｏｍｐａｎｙ'ｓ               ｌｏｗ               ｃｒｅｄｉｔｗｏｒｔｈｉｎｅｓｓ               ｏｒ               ｈｉｇｈ               ｆｉｎａｎｃｉａｌ               ｒｉｓｋ               ｐｒｏｆｉｌｉｎｇ. Ａｎｏｔｈｅｒ               ｃｏｍｐａｎｙ               ｉｎ               ｔｈｅ               ｓａｍｅ               ｉｎｄｕｓｔｒｙ               ｍａｙ               ｈａｖｅ               ａ               ｌｏｗ               ｆｉｎａｎｃｉａｌ               ｒｉｓｋ               ｐｒｏｆｉｌｉｎｇ,               ａｎｄ               ｉｔ               ｍａｙ               ｏｂｔａｉｎ               ｌｏａｎｓ               ａｔ               ａ               ｒｅｄｕｃｅｄ               ｒａｔｅ               ｆｏｒ               ｅｘｐａｎｓｉｏｎｓ. Ｂｕｔ,               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｓｔａｔｅｍｅｎｔ               ｗｉｌｌ               ｏｎｌｙ               ｓｈｏｗ               ａ               ｈｉｇｈ               ｇｅａｒｉｎｇ               ｒａｔｅ. Ｉｎ               ｔｈｉｓ               ｃａｓｅ,               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｌｅａｄｓ               ｔｏ               ｉｎｃｏｒｒｅｃｔ               ｉｎｔｅｒｐｒｅｔａｔｉｏｎｓ               ａｎｄ               ｃｏｎｃｌｕｓｉｏｎｓ               ａｂｏｕｔ               ｂｏｔｈ               ｔｈｅ               ｃｏｍｐａｎｉｅｓ. Ｂｅｎｃｈｍａｒｋｉｎｇ:               Ｔｈｅ               ｂｅｎｃｈｍａｒｋ               ｆｏｒ               ａ               ｃｏｍｐａｎｙ'ｓ               ｆｉｎａｎｃｉａｌ               ｒａｔｉｏｓ               ｉｓ               ｉｔｓ               ｉｎｄｕｓｔｒｙ               ａｖｅｒａｇｅｓ. Ｉｎ               ｏｒｄｅｒ               ｔｏ               ｅｎｓｕｒｅ               ｈｉｇｈ               ｐｅｒｆｏｒｍａｎｃｅ               ｆｏｒ               ａ               ｃｏｍｐａｎｙ,               ｉｔ               ｉｓ               ｎｅｃｅｓｓａｒｙ               ｔｏ               ｃｈａｎｇｅ               ｔｈｅ               ｐｒｏｃｅｓｓ               ｏｆ               ｂｅｎｃｈｍａｒｋｉｎｇ               ｗｉｔｈ               ｔｈｅ               ｉｎｄｕｓｔｒｙ               ａｖｅｒａｇｅｓ               ｔｏ               ｉｎｄｕｓｔｒｙ               ｌｅａｄｅｒｓ. Ｃｏｍｐａｎｙ               ｄｉｖｉｓｉｏｎｓ:               Ｌａｒｇｅ               ｃｏｍｐａｎｉｅｓ               ｏｐｅｒａｔｅ               ｍａｎｙ               ｄｉｖｉｓｉｏｎｓ               ｉｎ               ｄｉｆｆｅｒｅｎｔ               ｉｎｄｕｓｔｒｉｅｓ. Ｄｉｆｆｉｃｕｌｔｙ               ｉｎ               ｆｉｎｄｉｎｇ               ｓｕｉｔａｂｌｅ               ｉｎｄｕｓｔｒｙ               ａｖｅｒａｇｅｓ               ｆｏｒ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ａｒｉｓｅｓ               ｄｕｅ               ｔｏ               ｓｕｃｈ               ｄｉｆｆｅｒｅｎｃｅｓ. Ｑｕａｌｉｔａｔｉｖｅ               ｆａｃｔｏｒｓ:               Ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｄｏｅｓ               ｎｏｔ               ｃｏｎｓｉｄｅｒ               ｑｕａｌｉｔａｔｉｖｅ               ｆａｃｔｏｒｓ. Ｍａｎａｇｅｍｅｎｔ               ｑｕａｌｉｔｙ,               ｄｏｎａｔｉｏｎｓ,               ｃｈａｒｉｔｉｅｓ               ａｎｄ               ｇｏｏｄｗｉｌｌ               ｄｏ               ｎｏｔ               ｆｉｎｄ               ａ               ｑｕａｎｔｉｔａｔｉｖｅ               ｍｅａｓｕｒｅ               ｔｏ               ｉｎｃｌｕｄｅ               ｉｎ               ｆｉｎａｎｃｉａｌ               ａｎａｌｙｓｉｓ. Ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｄｅｐｅｎｄｓ               ｏｎ               ａｃｃｏｕｎｔｉｎｇ               ａｎｄ               ｎｏｔ               ｅｃｏｎｏｍｉｃ               ｄａｔａ. Ｉｔ               ｉｓ               ｒｅｔｒｏｓｐｅｃｔｉｖｅ               ａｎｄ               ｎｏｔ               ｐｒｏｓｐｅｃｔｉｖｅ               ｅｘａｍｉｎａｔｉｏｎ. Ｔｈｅｒｅ               ｉｓ               ａｍｐｌｅ               ｐｒｏｏｆ               ｔｈａｔ               ａ               ｃｏｍｐａｎｙ'ｓ               ｓｔｏｃｋ               ｐｒｉｃｅ               ｍｏｖｅｍｅｎｔ               ｃｏｒｒｅｌａｔｅｓ               ｃｌｏｓｅｌｙ               ｗｉｔｈ               ｃａｓｈ               ｆｌｏｗ               ｍｅａｓｕｒｅ               ａｎｄ               ｎｏｔ               ｉｎｃｏｍｅ               ｂａｓｅｄ               ｍｅａｓｕｒｅｓ.                Ｄｏ               ｔｈｅ               ｌｉｍｉｔａｔｉｏｎｓ               ｏｕｔｗｅｉｇｈ               ｂｅｎｅｆｉｔｓ? Ｔｈｅｙ               ｃｅｒｔａｉｎｌｙ               ｄｏ. Ｈｏｗｅｖｅｒ,               ｆｉｎａｎｃｉａｌ               ｒａｔｉｏ               ａｎａｌｙｓｉｓ               ｉｓ               ｓｔｉｌｌ               ａ               ｔｏｏｌ               ｕｓｅｆｕｌ               ｉｎ               ａｓｓｅｓｓｉｎｇ               ａ               ｃｏｍｐａｎｙ'ｓ               ｆｉｎａｎｃｉａｌ               ｐｅｒｆｏｒｍａｎｃｅ. Ａｌｔｈｏｕｇｈ               ｎｏｔ               ａｎ               ａｄｅｑｕａｔｅ               ｍｅｔｈｏｄ,               ｒａｔｉｏｓ               ｃａｎ               ｐｒｏｖｉｄｅ               ａ               ｆｕｎｃｔｉｏｎａｌ               ｕｎｄｅｒｓｔａｎｄｉｎｇ               ｏｆ               ａ               ｃｏｍｐａｎｙ'ｓ               ｏｐｅｒａｔｉｏｎｓ,               ｉｆ               ｕｓｅｄ               ｉｎｔｅｌｌｉｇｅｎｔｌｙ. Ｉｔ               ｉｓ               ｎｅｃｅｓｓａｒｙ               ｔｏ               ｃｏｎｓｉｄｅｒ               ｅｘｔｅｒｎａｌ               ｉｎｆｌｕｅｎｃｅｓ               ｏｎ               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｔｏｏｌ               ａｎｄ               ｒｅａｌｉｚｅ               ｔｈｅ               ｐｏｔｅｎｔｉａｌ               ｆｏｒ               ｄｉｓｔｏｒｔｉｏｎｓ. Ａｎａｌｙｓｔｓ               ｎｅｅｄ               ｔｏ               ｕｎｄｅｒｓｔａｎｄ               ｔｈｅ               ｌｉｍｉｔａｔｉｏｎｓ               ｉｎ               ｔｈｅ               ａｎａｌｙｔｉｃａｌ               ｍｅｔｈｏｄ               ａｎｄ               ｍａｋｅ               ｔｈｅ               ｎｅｃｅｓｓａｒｙ               ｍｏｄｉｆｉｃａｔｉｏｎｓ.

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List of Leverage Ratios Financial Leverage Ratios Leverage Formula Debt to Asset Ratio Asset Turnover Ratio Profitability Ratio Debt to Equity Ratio Leverage Ratio Formula