MALC1

Financial statement analysis focuses primarily on isolating information that is useful for making a particular decision. Through ratio analysis, users of financial data can analyze various relationships between items reported.

Describethe 3 main categories of ratios and provide a specific example of a ratio that is used in each category. For each of the 3 ratios you selected, describe how it is used in managerial decision-making.

Analytical Techniques

Managers can choose from several analytical techniques to help them make capital investment decisions. Each technique has advantages and disadvantages. Distinguish between the 3 capital investment techniques of:

1. Net Present Value
2. Internal Rate of Return
3. Payback Method

Describewhat you consider to be the top 2 advantages and 2 disadvantages of each technique and provide an example to support your top advantage of each method.