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The financial statements disclose the results of the activities of an entity and are prepared to help interested persons decide on questions such as whether to lend it money or invest in its shares. Financial statement analysis can be seen as part of the link between the financial statements and the decision-making process. (University of Leicester, 2601 Accounting for Managers,p6.1).
The true meaning of figures from the financial statements emerges only when they are compared to other figures. Such comparisons are the essence of why financial ratios have been developed. These ratios are powerful tools because they allow us to immediately grasp the relationship expressed...
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