Financial ratio analysis is used to evaluate the financial performance and condition of a business enterprise by measuring its progress towards financial goals. Its purpose is to provide information about the business entity for decision-making by both external and internal users. Terminology, definitions, and formulae (for vertical analyses, return on investment, investment utilization ratios, liquidity ratios, stability ratios, and growth ratios) are given in this technical note, and applied in a short exercise. This note would be suitable for a class in introductory finance.
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