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Chapter 18. Figuring financials > New ways of looking at the figures

New ways of looking at the figures

So far, we have discussed the structure and content of financial statements. Now it is time to really analyse them. There are four key ways to look at the numbers:

  • As presented – that is, you examine the underlying raw data.

  • Cross-sectional – look at relationships between various numbers (e.g. current assets relative to total assets) – otherwise known as vertical analysis.

  • Trends over time – otherwise known as horizontal analysis.

  • Comparisons – with the industry average or key competitors.


  

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