How does ratio analysis serve as an effective tool to assess the current and future financial status of firms?
Jessica Madison has been working as an accounting intern for ABC for the past 3 years. Jessica has recently completed her BA degree and aspires to become a financial analyst at ABC. You have agreed to set aside a time each week to help Jessica become more familiar with various investment management fundamentals.
Explain the following to Jessica:
- How does ratio analysis serve as an effective tool to assess the current and future financial status of firms? Describe the limitations of ratio analysis.
- Explain the odd-lot theory and how it acts as a market predictor.
- How does a fundamental type of analysis, such as ratio analysis, differ from a technical analysis?
400-600 words
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