1. Describe the main objectives of ratio analysis and why is this significant to external users of the financial statements, like investors.
2. What are the key objectives of comparative analysis? Why is it significant for external users of financial statements to perform this kind of analysis on the financial statements?
3. As a corporate controller, I frequently use financial ratios in the comparative analysis? What do you mean by the term comparative analysis? Why is it significant and how is it helpful to managers and internal users of the financial statements?
4. Explain why are liquidity ratios significant in analyzing a company's financial health? What does it signify if a company cannot meet up its financial obligations? How does this influence a company and its shareholders?
5. If a company shows total income, does that signify they are a 'healthy' company financially? Explain why or why not?