3. RATIO ANALYSIS Objectives: After reading this chapter, the students will be able to 1. Construct simple financial statements of a firm. 2. Use ratio analysis in the working capital management. 3 .1 Balance Sheet Model of a Firm Business firms require money to run their operations. This money, or capital, is provided by the investors. This is mutually beneficial to the firms and to the investors. The investors get a reasonable return on their investment, and the firms get the badly…
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