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How to Monitor Performance Through Critical Financial Ratios

In: Financial Models and Simulation

Author

Listed:
  • Dimitris N. Chorafas

Abstract

Financial analysts and investors have often been too simplistic in their views of income statements. This is particularly true with comments of the type: ‘Revenues grew 20 percent,’ or ‘Expenses have been reduced by 7 percent.’ Such pronouncements are not only vague but also misleading because they are often made in isolation: It is not possible to judge the health of a company: Without reference to what is going on in the rest of the P&L statement, by line and in a consolidated sense, and/or With no comprehensive notion on how the change in individual line items fits with the management’s overall strategic plan.

Suggested Citation

  • Dimitris N. Chorafas, 1995. "How to Monitor Performance Through Critical Financial Ratios," Palgrave Macmillan Books, in: Financial Models and Simulation, chapter 13, pages 275-298, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-0-230-37483-6_13
    DOI: 10.1057/9780230374836_13
    as

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