Ratio Analysis : What Other Factors, Beyond Ratios, Need To Be Considered?

In my earlier article on Credit Management  pertaining to  the credit evaluation using non-financial aspects or factors, I have already mentioned that we cannot entirely assess a company using only Ratio Analysis.
Other additional  factors should be considered for example:

• the performance of the company’s competitors,

•  the standard average financial ratios for the industry this company is in, and then measure the company’s performance against these averages,

• the company’s image or reputation in the community,

• any possible litigation the company is involved in either as plaintiff or defendant,

• customer testimonials (good and bad),

• the market behavior of the market the company is in,

• any offshore threats to competition,

• workforce demographics, and

• a detailed review of the company leadership, including the executive staff (president and vice presidents), and the board of directors.