British American Tobacco is the world’s most worldwide group with excellent brands sold in more than 180 markets and has an Accountable method of doing business from crop to customers. British American Tobacco has diverse goal which include to grow high-quality brands and the value of the business and to advance the efficiency. British American Tobacco is associated with the production of Tobacco, Cigarette etc.
Ratio analysis is a type of analysis that gives a better understanding and also guides in financial matters of business, company etc. Ratio analysis helps in improving the business management decision and also the performance of the business.
One of the means of knowing the performance of the company is by using Ratio analysis to analyze the company’s financial statement, in this report Ratio analysis would be used to evaluate the financial statement of British American Tobacco to know the performance.
2.0 USES OF RATIO ANALYSIS:
Financial analysts use Ratio analysis to evaluate a company’s performance because it helps to direct the spotlight of concentration on the areas of good or bad performance. Financial analyst use Ratio analysis to compare the year to year operation of the business, to know if the company is making profit or loss, and it also helps to measure up to the business companies in the same trade. The information and facts gained from the ratio analysis helps the financial analyst make knowledgeable business decision for the good health of the company and helps keep the company professionally practicable. Lewis, R and Pendrill, D (2004)
3.0 LIMITATIONS OF RATIO
Ratio analysis is a technique that is generally used to evaluate the financial performance of a business but there are a number of hindrances in using these ratios. Angell, R J, and Betty, L B (2003). The following are few of the limitations of ratio analysis.
3.1 Difference in Accounting Polices
The use of different accounting strategies may distort...