Context

There is a saying that ascertaining financial performance using financial report is an art. There is often many complexities of financial report and that problem is further challenged by its relationship to quality of financial report. The process of financial discussions should incorporate critical areas that is deemed to have significant impact on decision making process.

The ability to compare firms from different industries or sizes require sound understanding of the firm. That is quite often very difficult to ascertain due to uncertain market environment that is often lacking in stability or due to market dynamic and changes.

Question:

As an end user of annual reports, there is an abundant of information available to various user to facilitate decision making process. Use of absolute vs financial ratios has been able to provide first level of understanding but often insufficient to generate insight to raise the quality of decision. Explain in details, how would you advise novice user on how best to form an insight in the current market situation? Hint: Criteria management