Photo AI
Kevin is considering investing in a business - HSC - SSCE Business Studies - Question 12 - 2018 - Paper 1
Question 12
Kevin is considering investing in a business. To help Kevin determine which business to invest in, he should consider comparative ratio analysis because A. cash fl... show full transcript
Worked Solution & Example Answer:Kevin is considering investing in a business - HSC - SSCE Business Studies - Question 12 - 2018 - Paper 1
Step 1
C. similar businesses are evaluated.
Answer
Comparative ratio analysis allows Kevin to assess the financial performance of similar businesses within the same industry. This method provides insights into how a specific business compares with its peers, helping to gauge its relative strength and potential for growth. By evaluating financial ratios such as profitability, efficiency, and liquidity among comparable businesses, Kevin can make a more informed investment decision.