3.5

Apuntes

3.5 Unit 3.6 Efficiency ratio analysis (HL only)RATIO ANALYSIS FOR FINANCIAL STRATEGIC ANALYSIS Introduction This section of the IB Business Management syllabus examines efficiency ratio analysis for financial strategic analysis (for HL students only). It requires students to understand the purpose and use of financial ratios, extending their understanding of profitability, efficiency and liquidity ratios previously discussed in Unit 3.5. HL students also need to examine the various strategies that can be used to improve a firm's efficiency ratios. Introduction Ratio analysis is a financial analysis tool used in the interpretation and assessment of an organization's final accounts, i.e. the firm's financial statements, consisting of the balance sheet and income statement (profit and loss account). Such analysis helps decision-makers and other stakeholders to evaluate a business organization's financial performance by exposing various financial strengths and weaknesses. Finally, ratio analysis helps to make meaningful historical and inter- firm comparisons by analysing past data of the business, and those of other businesses in the same (or even different) industrie...