External Users: are potential investors, banks, government agencies and other parties who are outside the business but need financial information about the business for a diverse number of reasons. Prospective investors make use of financial statements to assess the viability of investing in a business...
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Financial analyses are often used by investors and is prepared by professionals (financial analysts), thus providing them with the basis in making investment decisions. Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures...
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Analysis of Financial Statement The higher the turnover, the better the company. Profitability measures are used to determine return on investment and the return on equity. Price/Earnings ratio is another way to measure a company's profitability by dividing the market price of a common share of stock by the earnings per share...	2 / 552
Ratio Analysis Companies with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover.3 Some of the most used and examined ratios are the profitability ratios which measures performance to indicate what a company is earning on its sales, assets, or equity...	3 / 569
Financial Ratios This ratio is used to determine how effective the company is at keeping production costs low. Example: an operating profit margin of 0.17 indicates that after subtracting all operating expenses 17% of sales revenues remain...	4 / 1081
Financial Ratios Therefore profitability ratios "measure a business' overall financial performance by evaluating its ability to generate revenues in excess of operating costs and other expenses," (p...	2 / 406