Accounting - Topics - Understanding and using accounting information -
Strategies for evaluating accounting information

Strategies for evaluating accounting information

This may be done in three stages:

* select appropriate ratios and other criteria to identify significant
change over the two historical years and that expected for the budgeted
year

* fully explain the identified changes

* give reasons for the changes. You must indicate the direction,
magnitude and effect of changes where appropriate. The reasons must be
relevant to the scenario chosen

Unfortunately many students fail to go past ratios when selecting criteria
for assessing a business.

When assessing a business - three other areas also are important:

* comparative data (C)

* actual data (A)

* economic data (E)

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