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. 

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