Two primary perspectives to use in financial ratio analysis
1) Briefly discuss the two primary perspectives one should use in financial ratio analysis. How many years should one review the financial statements of a firm?
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1) The two primary perspectives used in financial ratio analysis are:
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<br>a) Time-series analysis. This perspective shows the financial results of the firm over a certain time period. For example, profits (y-axis) can be plotted over the last 5 years (x-axis).
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<br>b) Cross-section analysis. Here we ...
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