KCQ

CH3 Q1

I can understand how people try to develop systems to help them quickly compare companies.

The system of ratios for example to compare assets and liabilities, this can give a quick comparison between firms doing the same business but is not really effective beyond that. Doing the hard work and going into a company’s statements in details will always be best as it will give you a more complete picture of financial, economic and business realities, but I can see if you are trying to evaluate a large number of similar companies this may help you narrow the field and then you can go in deeper into the statements.


 CH3 Q2

Profit/sales ratio & turnover ratio used by du Pont gave them helpful indications on how they were traveling. A more thorough detailed analysis would still be need to done on a regular basis. As a tool I can see how these ratios would be useful but cannot replace a complete analysis to give a complete picture of business.