Accounting for Limited Companies

In order to compare two public companies a financial analyst must evaluate the financial results of each firm. There are thousands of companies listed in the London Stock Exchange. Due to the variety of investment alternatives available in the equity market the best way to determine which corporation is a better investment is by applying financial models and techniques that allow for a systematic evaluation of the financial results of a company. There a several techniques that can be used to evaluate the performance of a firm, but one of the most popular and effective techniques is the use of ratio analysis. Ratio analysis is relative simple to apply for any person if they know the formulas for the different financial ratios. The use of ratio analysis does have its limitations because it