Trend Analysis

摘要

Ratios are useful as both snapshots and video clips. for example, the cash on your balance sheet is a snapshot of your bank balances at one point in time. By the time you generate your financial statements, the cash balance has shifted. So, you must generate a video clip (a trend analysis) to show progress over time. Trend analysis allows you to see where you are going and how fast you are getting there. It provides a context for your own results and a framework for putting your numbers into perspective to minimize the impact of emotion on management decisions. Below are key ratios we discussed last month for a company with $5 million in annual sales revenue: Let's expand the analysis by taking the first ratio and providing the context of trend analysis.