Question

What is trend analysis and how does it relate to the firm’s ratios? What is benchmarking and how is it related to the firm’s ratios.

Answer 1

Answer 1

Trend Associate in Nursingalysis consists of using ratios to compare company performance on an indicator over time, usually to forecast or inform future events.

The trend in prices, sales, profits and alternative facts is identified by computing ratios of relevant accounting figures of previous few years. This analytic thinking with the assistance of ratios is also helpful for foretelling and coming up with future business activities.

Revenue and price data from a company's financial gain statements is organized on a line for multiple coverage periods and examined for trends and inconsistencies. for instance, a fast spike in expense in one amount followed by a pointy decline within the next amount will indicate that Associate in Nursing expense was engaged doubly within the 1st month. Thus, analytic thinking is sort of helpful for examining preliminary monetary statements for inaccuracies, to envision if changes ought to be created before the statements ar discharged for general use.

Answer 2

Benchmarking is a method of activity the performance of a company's product, services, or processes against those of another business thought of to be the simplest within the trade, aka “best at school.” the purpose of benchmarking is to spot internal opportunities for improvement.

Generally, a ratio of two to one is taken into account a signal of good financial condition. However, a lot of depends on the standards of the particular trade you're reviewing. If a company's inventory is slow in commercialism, a stronger current ratio is needed. Our recommendation: two.0 or larger.

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