Section overview

This topic turns to the processing and use of financial data and introduces the tools and techniques of financial analysis and interpretation. There are many tools and techniques used for financial analysis, and many of these are ratios of financial information. Using a ratio combines information and can relate parts of the business together — often giving a deeper insight into what’s going on.

This topic introduces the stakeholders who will be interested in your financial information, considers the different ratios used to analyse an organisation, and looks at which ratios are more appropriate to which stakeholders. Finally, an interpretation of financial ratios is explained in order to better understand the position of an organisation.