Question 3-1

What is wrong with just doing what ‘works’ in relation to analysing financial statements? There are plenty of experienced practitioners in our capital markets. Why do we not simply find out what most are doing and just do this ourselves? What do you think and why?

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Question 3-2

What is the benefit of having a structure, such as the du Pont company’s framework, to help use ratios to analyse a firm’s financial statements? Is it any better (or worse) than simply doing what experienced practitioners do? Why or why not?

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