Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011). Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.

Interreting financial results | Business & Finance homework help

When comparing financial ratios between different years, it is important to consider the specific industry and market conditions that may have changed in the intervening periods. This way, one can get a better understanding of how a company has performed relative to its competitors and whether any changes in performance metrics can be attributed to external factors or management decisions.

For example, if we were looking at a hotel chain’s liquidity ratios from 2014 to 2013, it could be helpful to look at overall trends in travel demand for those two years—for instance, did the number of travelers increase or decrease? By taking this broader picture into account, investors can assess not only what happened within the company but also why certain results may have occurred. Similarly, if we compared 2012 and 2011 financial ratios for an automotive company we might want to examine changes in oil prices during that time frame as they could certainly affect profitability.

Comparing financial ratios against industry benchmarks is another useful method for evaluating performance. In this case one should take into account both industry averages as well as top performers so that they can measure their assigned company’s performance against others in its specific field. Furthermore, since markets are constantly changing over time it is important to use the most up-to-date figures when making these comparisons so that one has an accurate picture of how their firm stacks up against its peers.