BUS1 170 Lecture 4: BUS170: Chapter 4
4 Apr 2016
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Document Summary
Banks and other lenders deciding whether to loan money to the firm. Suppliers who are considering whether to grant credit to the firm. Professional analysts who work for investment companies considering investing in the firm or advising others about investing. Individual investors deciding whether to invest in the firm. To compare the performance of different divisions. To evaluate the firm"s financial performance in light of its competitors" performance. Common size financial statement- a standardized version of a financial statement in which all entries are presented in percentages. It helps to compare a firm"s financial statements with those of other firms, even if the other firms are not of equal size. For a common size income statement, divide each entry in the income statement. Financial a second the financial the income balance by sales. For common size balance sheet, divide entry in the balance sheet by total assets. Ratios- provide method for standardizing information on statement and sheet.
