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Ratios!! Compare the various ratios with last year's cash flow statement and balance sheet, and look at variances. Then determine why these variances have occurred. Also compare budgeted cash flow to actual cash flow and determine whether these were favorable or u favorable, and again determine why.
Please note different industries have different norms for ratios, ie liquid ratio for car sales would be different to supermarket. Good to compare to industry average or like business to determine ratios are on track or way off.
This can be used as a management tool to determine action for the following financial periods.
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