What is the ratio analysis? Why do we use ratios, not absolute numbers, to analyze companies? Are absolute numbers useful for analyses? Why or why not?
When comparing ratios, why do you need to do trend analysis, compare between the current and past ratios, and compare with those of competitors? Why are the pre-determine standards or benchmarks so important?
Why do complexities and context need to be concerned when interpret ratios? Give a couple of examples to illustrate your points.
What is common-size analysis, including vertical and horizontal? Give a brief example to illustrate your points. Explain its usefulness and shortcomings.
What is year-to-year analysis? Give a brief example to show your understanding. Comparing common-size analysis, why do we use year-to-year analysis?
Is it possible to compare companies in different industries? Why or why not?