The interpretation of the indices - False positives
The "QUICK RATIO" has improved but the company has gone bankrupt! Indices are relationships between values derived from available accounting and balance sheet information, which help us evaluate a company and make comparisons.
Unfortunately, the analysis by indices hides many pitfalls, if not done correctly, with the risk of generating False Positives and False Negatives. Building and interpreting the financial statement ratios it has now become a mandatory or at least necessary activity for CFOs, professionals and financial analysts.
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