Financial ratios by themselves are of little use

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1. Provide a critical overview of the three potential sources of noise and bias in the accounting data reported by companies, and explain the notion of earnings quality within the context of equity research.

2. A financial analyst comments: “Financial ratios by themselves are of little use. The choice of what to benchmark them against is what gives me vital information.” Explain how ratios can identify internal inconsistencies within the financial statements and critically assess the benefits of using benchmarks, illustrating your answer with potential benchmarks.

Reference no: EM132064611

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