Accounting·Interpretation of statements · NSSCO 1.2
Interpreting & evaluating the statements
Narrated lesson · press play
Calculating a ratio is only half the job. In this lesson we learn to READ the ratios — to say what they actually mean, to compare them over time and against similar businesses, to advise management with a simple compare–conclude–recommend method, and to be honest about the real limitations of ratios. This is where the numbers finally start to speak.
What you'll learn in this lesson
By the end you should be able to (NSSCO Accounting 1.2):
- Discuss the importance of accounting ratios to owner(s), manager(s), trade creditors, lenders, employees and potential investors/partners
- Compare accounting ratios over time or with similar businesses to advise management
- Discuss the limitations of accounting ratios
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