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what financial variables or ratios you consider essential to compare companies' financial performance

Sagot :

profitability, liquidity, solvency, and valuation are the financial variables or ratios I would consider essential to compare companies' financial performance.

Because they are the most accurate predictors of the expectations and actions of investors and other economic players, financial variables are used to forecast future economic events. Market value, assets, equity, cash flow, sales, and market/book value are a few examples of commonly used financial performance factors. Other variables include levels, growth, and variability in profit as well as market value, assets, and cash flow. The process of horizontal analysis is used to track changes in the financial variables across time. The firm evaluates ratios, statements, and other metrics over time in a trend analysis technique known as horizontal analysis. Dependent variables and independent variables are used in financial modelling and accounting. In contrast to independent variables, which are unaffected by changes in other variables, dependent variables change when they are influenced by other factors.

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