The items may be called the proprietorship account in a single proprietorship or
the partners’ equity in a partnership.
Operating statements for internal control can be made up for any feasible time
period. Most large firms present quarterly statements for their investors, al-
though the annual results carry the most weight and go into the record books of
the financial services, such as Standard & Poor’s or Mergent’s.
CHAPTER 3 Ratio Analysis
As additional ratios are used, one soon discovers that the same information is
being presented in a different form.
This means that these companies, in effect, carry no net working capital.
The larger the percentage of ownership capital in the financial structure the
smaller will be any difference between the rate of net profit on equity and the
rate of net profit on total assets.
See Chapter 9 for a detailed analysis of this ratio and its variants.
For example, a company with many firm contracts might borrow on current
terms and safely carry a lower current ratio than would be desirable for another
company of the same type.
CHAPTER 4 Debt, Equity, Financial Structure, and the
Investment Decision
Called “gearing” in England.
Financial risk was divided into borrower’s risk and lender’s risk by John May-
nard Keynes in The General Theory of Employment, Interest and Money(Har-
court, Brace, 1936), pp. 144–145.
CHAPTER 7 Comparing Census/National Science Foundation
R&D Data with Compustat R&D Data
Reprinted from Research Policy, Vol. 18, No. 4, Bean and Guerard, “A
Comparison of Census/NSF R&D Data vs. Compustat R&D Data in a Fi-
nancial Decision-Making Model,” pp. 193–208, 1989 with kind permission
