Ratio Analysis as Tools to Predict Expected Earnings
Financial annual report is a fundamental report for investment decision. More information and how well the information organized, make investors easier to determine their decision. Investors as user of annual report should know how to use and read useful information from it. One of common method to describe the condition a company by using ratio analysis. Among the dozens of financial ratios available, there are at least 30 measurements that are the most relevant to the investing process and organized them into six main categories as per the following list: liquidity, activity, leverage, profitability, investment valuation and cash flow indicator ratio.
When using Property, Plant and Equipment (PP&E) data from annual report, investor can use Fixed-Asset Turnover ratio. PP&E is A company asset that is vital to business operations but cannot be easily liquidated. The value of property, plant and equipment is typically depreciated over the estimated life of the asset, because even the longest-term assets become obsolete or useless after a period of time. Depending on the nature of a company’s business, the total value of PP&E can range from very low to extremely high compared
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