Chapter 4 Analysis of Financial Statements Learning Objectives After reading this chapter, students should be able to: ◆ Explain what ratio analysis is. ◆ List the five groups of ratios and identify, calculate, and interpret the key ratios in each group. In addition, discuss each ratio’s relationship to the balance sheet and income statement. ◆ Discuss why ROE is the key ratio under management’s control, how the other ratios affect ROE, and explain how to use the DuPont…
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