Explain why the principal values of calculating financial ratios are to make comparisons over time and to develop comparisons with other companies.

Discuss with your supervisors: Prepare a written report on the financial statements

Financial ratios are an important tool for assessing performance of a business as they provide insights into how efficiently it is utilizing resources & managing operations. For instance – calculating current ratio allows one understand company’s liquidity position which can then be compared against results from previous periods in order gauge whether any trends (positive or negative) exist over time.

Similarly – comparing financial ratios across companies within same industry also offers valuable insight as this provides sense of how well-positioned firm is relative their competitors: such analysis not only helps identify potential opportunities but also highlights areas where further improvement may needed order remain competitive. Furthermore – relying on data from other firms can help develop benchmarks for measuring performance so that adjustments made accordingly if necessary.

In conclusion – understanding various financial ratios & using them properly essential part of making informed decisions when working with businesses: by being able compare results over time as well between enterprises, managers/investors gain greater perspective on situation which can assist them determining best course action given particular context

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