Software and Hardware System Requirements for a Project

Chapter 5Requirement AnalysisThe chapter describe security model demand and which is categorised on the footing of user interaction and specification of package and hardware demand. Besides its overview regulations assign to the assorted user. 5.1 Software RequirementNameDetailssOperating SystemWindows XP and UpperDatabase ServerMySql, XMLFront EndNetbeans 7.2, JSP, Java SDK 6.0Application ServerTomcat 6.0BrowserIE 5.0 and Upper or Mozilla, Google ChromeTable No 4.1 Software Requirement 5.2Hardware RequirementNameDetailssProcessorPentium IV and supra.Random-access memory256MB and aboveHard Drive40 GBNetworkLocal area networkTable No 4.2 Software Requirement 5.3High Level Process Diagrams A high degree description of the demands of the undertaking is to manage specific defined maps utilizing a common platform, whilst other maps for content, enrollment, individuality direction, and increasing security to single applications will be outside the range of the undertaking and this range is detailed in the diagram below: Figure 5.1: Scope of the Undertaking This stage of the undertaking will cover individual factor hallmark and will merely capture username and watchword to authenticate a website user. The demands are split into four subdivisions:Generic demandsSelf disposal functionalityDelegated disposal functionalityHelp Desk disposal.The generic demands will embrace certain facets that are generic across the ego disposal and delegated disposal functionality. The undertaking will present the following generic demands for self disposal and delegated disposal: Figure 5.2: Generic demands for self disposal and delegated disposal The undertaking will present the following self disposal functionality: Figure 5.3: Self disposal functionality The undertaking will besides present the followers delegated disposal functionality: Figure 5.4: Delegated disposal functionality There will besides be the undermentioned Help Desk disposal functionality that will be delivered by the undertaking: Figure 5.5: Aid Desk disposal functionality5.4 User groupsUser groupDescriptionExternal web site userAn external web site visitant to any web site or applicationAdministratorAn internal decision maker who will hold the capableness to supply entree direction to application specific external web site usersHelp Desk AdministratorAn internal decision maker who will hold the capableness to back up the security model and users of the modelTable No 5.3: User Groups5.5 Requirements5.5.1 Generic demandsGEN-0011-Rule-2For Self disposal and decision maker for delegated disposal enrollment signifiers, the information Fieldss must be blank on first burden of the signifier.GEN-0011-Rule-3The system will non auto-generate usernames for decision makers for delegated disposal. The usernames will be entered manually.GEN-0011-Rule-4When the web site user receives the invitation electronic mail and clicks the URL to lade the enrollment signifier, the username on the signifier will be pre-populated and n ot-editable.GEN-0011-Rule-5Auto-complete must be set to murder.GEN-0011-Rule-6Password and replies to security inquiries must be obscured.GEN-0011-Rule-7The username can non be an email reference.GEN-0011-Rule-8The website user must put up 4 security inquiries, of which 2 will be indiscriminately shown during future hallmark procedures.GEN-0011-Rule-9Security replies must non:Be cleanRepeat replies across the inquiriesBe individual figure or character repliesGEN-0011-Rule-10The replies to the security inquiries will be a minimal 3 alphameric characters, with a maximal 20 alphameric characters and must non incorporate the undermentioned particular characters:â€Å" ! ? $ % ? / or @GEN-0011-Rule-11Website users will merely be registered for applications/websites within a pre-defined group, i.e. for either BHW applications or international applicationsGEN-0011-Rule-12The format of the username will be a minimal 6 alphameric characters, with a upper limit of 20 alphameric characters an d must non incorporate the undermentioned particular characters:â€Å" ! ? $ % ? / or @The username will be instance sensitive.GEN-0011-Rule-13The format of the watchword will be a minimal 8 alphameric characters, with a upper limit of 20 alphameric characters and must be instance sensitive.GEN-0011-Note-1:The application specific demands for informations gaining control are non documented in this DBRS and will be documented at the application specific degree.GEN-0011-Note-2:The signifier will non capture opt-in /opt-out for selling intents. This will be done at application degree and non at the security degree.GEN-0011-Note-3:Website users will be able to register for specific merchandises at an application degree.GEN-0011-Note-4:The website user will merely be able to take a security inquiry one time from the list, i.e. the inquiry selected in ‘Security inquiry 1’ will non look in the dropdown for ‘Security inquiry 2’ and so on.GEN-0011-Note-5:Any indivi duality inside informations, i.e. name and reference, will be captured at an application degree.GEN-0012Send electronic mail verification on successful enrollment to the web site userGEN-0012-Note-1:A concern determination has been made to go on with the preferable option that does non necessitate email confirmation and therefore to merely hold one measure enrollment. The website users will have an electronic mail corroborating that they have registered successfully.GEN-0012-Note-2: Without capturing more informations on the enrollment signifier, any electronic mails that are sent will non be customised to the website user and the salute will be ‘Dear User.’GEN-0013Post log-in, all designated assets ( pages ) will be protected by the Security Platform.GEN-0020The watchword strength must be either medium or strong and must be displayed on the undermentioned signifiers:RegistrationChange watchwordSecurity inside informationsGEN-0020-Rule-1Mandatory ( 1 point each and a en tire 2 points in the marking mechanism )Minimum of8 characters in lengthMaximum of 20 characters in lengthA combination of letters and at least 1 figureOptional ( 1 point each )At least one particular character from this list @ , # , $ , ^ , & A ; , _ , ~ , –A mixture of upper and lower instance lettersPoints scoredDisplay& lt ; = 2Weak ( Red saloon )3Medium ( Amber saloon )4Strong ( Green saloon )GEN-0020-Rule-2The watchword strength saloon will expose the coloring material and besides the diction to follow with the Accessibility criterionsGEN-0020-Rule-3On page burden the watchword strength index will be clean.GEN-0030The enrollment signifier must incorporate Captcha functionalityGEN-0030-Rule-1The Captcha functionality must follow with the Accessibility criterionsGEN-0030-Rule-2The Captcha functionality must be instance sensitive.GEN-0040Provide registered website users with the ability to login to an application or merchandise on any web site that has migrated to the Secu rity FrameworkGEN-0040-Note-1:While the website user will be able to login to any web site or application, they may be required to register for each merchandise at an application degree.GEN-0050Website users must be able to reset their watchword through disregarded watchword functionalityGEN-0050-Rule-1The website users must reply 2 security inquiry ( s ) right to reset their watchword.GEN-0050-Rule-2The 2 inquiries will be displayed indiscriminately for the set of 4 inquiries answered on initial enrollment.GEN-0060Website users must be able to recover their username through disregarded username functionality to reconstruct their ability to log in.GEN-0060-Rule-1An electronic mail will be generated incorporating the website user’s username.GEN-0070A website users account will be locked if the website user exceeds the maximal figure of login efforts or fails to reply their security inquiries rightGEN-0070-Rule-1There should be 2 error messages:For inputting incorrect inside in formations, e.g. username and watchwordFor history lockupGEN-0070-Note-1:The figure of login efforts and replying of security inquiries should be set to 3 efforts, so the history is locked and an enlightening mistake message is displayed.GEN-0070-Note-2:For the history unlock procedure, web site users will be advised to reach the Help Desk in order to unlock their history.GEN-0070-Note-2:There will be three history lock out periods. The first two lockouts will be impermanent and last for 20 proceedingss. The concluding lockout will be lasting and necessitate Helpdesk to unlock the history.GEN-0080The system must be able to run out a web site users password at a specified interval, e.g. monthlyPremise:The watchword termination will be set at a generic degree and if an application requires an alternate watchword termination policy, this must be applied at the application specific degreeGEN-0090The system must be able to stop a user session after a specified period of inaction on the w eb site.GEN-0090-Rule-1The in agreement length of clip for the period of inaction must be set across the platform and non at application degree.GEN-0090-Rule-2The inaction timeout will be configured to 20 proceedingss.GEN-0100Functionality must be provided to let the website user to log out of the Security Framework.GEN-0100-Note-1:The logout user journey will be an application degree specific user journey.GEN-0100-Note-2:This will be locally configurable for each concern unit.GEN-0110Provide individual sign-on capableness such that when a website user registries for one web site or application, they are able to login to another web site or application.GEN-0110-Note-1:While the website user will be able to login to any web site or application, they may be required to register for each merchandise at an application degree.GEN-0120The system should supply scrutinizing and describing functionality of both self disposal web site users and delegated disposal web site users.GEN-0120-Note- 1: This functionality will be provided to the Help Desk Administrators as a portion of the Oracle Identity and Access merchandise suite.GEN-0120-Note-2:Any web analytical coverage will be provided through the Omniture toolGEN-0130The system should supply scrutinizing and describing functionality of the decision makers using the delegated disposal toolsGEN-0130-Note-1: This functionality will be provided to the Help Desk Administrators as a portion of the Oracle Identity and Access merchandise suite.GEN-0130-Note-2:Any web analytical coverage will be provided through the Omniture toolGEN-0140The concern units should supply an attack and procedure for managing website users concerned with possible history via media, whether this be via electronic mail or via a Call CentreGEN-0150The system must dispute an terminal user when they:Attempt to entree unauthorized contentAttempt to entree via a bookmark when already logged outGEN-0160The system shall be capable of observing that a user is logging in a 2nd clip from a different topographic point, in which instance the installation should be configurable to reject the 2nd session, end the bing session, or permit coincident Sessionss.Table No.5.4: Generic demands5.5.2 Self disposal demandsRqt No.DescriptionSource/OwnerPrecedenceSA-0020Provide registered and logged in website users with self disposal capablenesss to alter their generic security inside informationsSA-0020-Rule-1A website user must be able to amend the undermentioned security inside informations:Email referencePasswordSecurity inquiries and repliesSA-0020-Rule-1A website user will non be able to amend the username.SA-0020-Note-1:Any application or merchandise specific informations will be amended at application or merchandise degree and as such will non be documented in this DBRS and will be documented at the application specific degree.SA-0021The system must direct an electronic mail to the registered web site user when an amendment has been made to their inside informationsSA-0021-Rule-1The electronic mail must province which inside informations have been amended, butnonwhat the inside informations have been changed from or to.SA-0021-Rule-2If the web site user has amended their electronic mail reference, the system must direct an electronic mail to the old and new electronic mail references advising of the amendment.SA-0021-Note-1:This electronic mail will besides incorporate instructional text for the web site users in instance they are concerned that their history has been compromised.Table No. 5.5: Self disposal demands5.5.3Delegated disposal demandsRqt No.DescriptionSource/OwnerPrecedenceDA-0010Provide decision makers with delegated disposal capablenesss to make an history for external web site usersDA-0010-Rule-1decision makers will merely be able to register Website users for applications/websites within a pre-defined group, i.e. for either BHW applications or international applications.DA-0010-Rule-1decision makers will non be able to utilize the same username across pre-defined groups as the username must be alone.DA-0011Provide decision makers with the ability to advise website users of their enrollment inside informations via an invitation electronic mailDA-0011-Rule-1The point at which the invitation electronic mail is sent to the website user will be configurable for each application, i.e. the electronic mail may be sent when the user has been created by the decision maker or at a ulterior phase following updating of application specific history inside informations.DA-0012Provide decision makers with delegated disposal capablenesss to modify an bing history electronic mail referenceDA-0012-Rule-1The system must direct an electronic mail to the registered web site user when an amendment has been made to their inside informations by the decision maker.DA-0012-Note-1:The decision maker will merely be able to modify the electronic mail reference for an history.DA-0013Provide decision makers with the ability to seek for an bing web site user by username and/or electronic mail.DA-0013-Rule-1The hunt capableness will be application degree particular and will non return users non registered for that application.DA-0014Provide decision makers with delegated disposal capablenesss to disenable and enable an bing history from the applicationDA-0014-Rule-1The decision maker will merely be able to disenable an bing history from the specific application the decision maker is logged into. The decision maker will merely be able to enable an history if it has antecedently been disabled from the application.DA-0014-Rule-2Presentment must be sent to the Help Desk decision makers when a user has been disabled for a specific application.DA-0014-Rule-3Presentment must be sent to the bing user when their application particular history has been enabled.DA-0015Provide decision makers with the ability to re-send an invitation electronic mail to a website user during the URL expiry period and post the URL expiry period.DA-0015-Rule-1This functionality will merely be available if the web site user has non logged in and completed their profile for the first clip.DA-0015-Rule-2If the invitation is re-sent during the expiry period, so the URL from the initial electronic mail will be invalid and the expiry period will be resetDA-0020Invitation electronic mails from the delegated decision maker must incorporate the undermentioned information for the website user:User nameEncrypted URL to automatically log the user into their historyDA-0020-Rule-1The URL will run out on first successful usage and the website user must alter the watchword, enter their personal inside informations, select the security inquiries and input their replies to their chosen security inquiries on loginDA-0020-Rule-2The fresh URL should be expired after a configurable clip period and the recommendation is that this is less than 2 hebdomads.DA-0020-Rule-3As a lower limit the watchword must be encrypted.DA-0030Hard transcript invitations could be sent from the delegated decision maker and must incorporate the undermentioned information for the website user:User nameImpermanent watchwordFriendly URLDA-0030-Rule-1The impermanent watchword will run out on first usage and the website user must alter the watchword, enter their personal inside informations, select the security inquiries and input their replies to their chosen security inquiries on loginDA-0030-Note-1:The ability to capture reference inside informations for poster of the difficult transcript invitations has non been captured in this DBRS and will be documented at the application specific degree.DA-0030-Note-2:The concern procedure for the despatching of the difficult transcript invitation is out of range of the Security Platform and must be put in topographic point by the concern unitsDA-0040Provide decision makers with the screens and functionality for the delegated disposal which will be deployed at an application specific degree.DA-0060Provide decision makers with the ability to re-enable a user that has antecedently been disabled from the applicationDA-0070Provide decision makers with the ability to seek for handicapped users by username or electronic mail.Table No 5.6: Delegated disposal demands5.5.4Help desk disposal demandsRqt No.DescriptionSYS-0010Provide Help Desk decision makers with the ability to:Search for an historyModify an historyDisable an historyEnable an historyDe-register an history from the security modelRe-register an history on the security modelDe-register an history from an applicationRe-register an history to an applicationUnlock an historyReset watchwordUpload users in majoritySYS-0010-Rule-1The Help Desk decision makers will be able to de-register an history at the security model degree. This will forestall the website user from logging into any application and sites.SYS-0010-Rule-2Presentment must be sent to each of the decision makers when a user has been de-registered at the security model degreeSYS-0010-Rule-3Presentment must be sent to the bing user when their history has been de-registered from the Security FrameworkSYS-0010-Rule-4Presentment must be sent to the bing user when their history has been modified in any manner on the Security Framework.SYS-0010-Note-1: This functionality will be provided to the Help Desk Administrators as a portion of the Oracle Identity and Access merchandise suite.SYS-0010-Note-1:An electronic mail will be sent to the termin al user for the alteration of each property.Table No. 5.7: Aid desk disposal demands

Paper Ratio and Financial Statement Analysis Essay

Executive Summary In corporate finance, both ratio and financial statement analysis are important tools that can be used in order to assess a company’s strength financially. They can be used in order to forecast a business’ prospective cash flow and ability to grow in the future, as well as a company’s strengths and weaknesses. Income statements, balance sheets, the statement of retained earnings, and the statement of cash flows are the four primary types of financial statements used in corporate finance. All of these financial statements serve to analyze a firm’s cash flows from different perspectives and are all interrelated. Ratio analysis, another important tool in financial analysis, analyzes the probability that a firm will be profitable or not. The different kinds of ratios used are liquidity ratios, efficiency ratios, leverage ratios, profitability ratios, and market-value indicators, with each type including various different specific ratios that one can calculate when examining a firm’s operability. Both the financial statements and ratio analysis offer an analysis of a firm’s finances at a particular point in time, while also forecasting its financial stability in the future. Another advantage is that they allow a firm’s finance team to compare its finances to that of other similar companies, known as benchmarks, in order to value the strength of their firm in the marketplace. However, financial statements and ratio analysis can also lack in their accuracy since financial analysis is often based on historical figures from the past several years and thus only offer the prospective financial future rather than concrete data since often a firm’s finances are based on the ever-changing marketplace or other factors not in control of the firm’s managers, such as economic conditions. Despite such disadvantages, financial statements and ratio analysis is a very important aspect in the corporate environment and essential to examining a firm’s viability. Overview In business, financial statements are important tools, which allow a firm to clearly state its financials in terms of figures, such as revenues, expenses, net incomes, etc. and analyze strengths and shortcomings of the firm. This allows the firm’s managers to clearly see what is and is not working for the firm. Ratio analysis is used when identifying and analyzing multiple variables in the firm’s operations, such as inventory, accounts receivable, net sales, etc. When completing financial statement and ratio analysis, it is beneficial for the firm to examine its financial figures over several previous consecutive years, so that any and all patterns in its operability can be observed and analyzed. Such patterns can reveal aspects of the company where efficiency is not at its finest and thus there is a financial loss. As a result, the company can implement changes in order to improve upon these shortcomings and increase its profits. Ratio analysis is both a qualitative and quantitative way of looking at the data in order to analyze how a company functions and ways to improve it by looking at present and previous functioning and forecasting the future of the company. Both financial statement and ratio analysis can provide insight into the success or failures of specific product lines, allowing managers to make intelligent decisions regarding what their firm should offer in the future to consumers. Financial statement analysis is also a way to assess and validate a company’s viability in the marketplace to outside investors/creditors. Financial statements assist managers in understanding how profitable their firm is. It is often used to make comparisons of one firm to another or of a specific time period to another time period for the same firm. The main aspects of a financial statement are revenues, expenses, and net income. Revenues are sales numbers that come from products or services a firm creates through its business operations (Parrino, 2011). For a firm, such as Microsoft, its revenue would come from products such as the computers, phones, tablets, and software it sells to consumers. On the other hand, for a consulting firm, such as Accenture, revenues would stem from the fees it charges for its consulting services contracts with various government agencies around the world. Both companies are providing a product to a consumer, one simply happens to be a tangible product that people buy, while the other is a service product that agencies need for their functionality. Expenses are the costs a firm incurs while generating its revenues (Parrino, 2011). For Microsoft, expenses would stem from the costs of building its products, marketing them, developing new products, shipping them around the world, etc. For Accenture, expenses would stem from the cost of all of its consultants, which includes their wages, insurance, company laptops it provides to each of them, travel costs for sending consultants around the world on projects, etc. Again both types of firms exhibit expenses; some of them are just different. Net income shows the company’s revenue relative to its expenses. If revenues exceeds expenses then the company has a net profit and is â€Å"in the black† for that time period (Parrino, 2011). On the other hand, if expenses exceed revenues then the company has a net loss and is â€Å"in the red† for that time period (Parrino, 2011). By looking at financial statements from one fiscal period to the next or annually, managers can observe how their firm is progressing. If the numbers show that the firm is not operating at an optimal level or there is a sudden decline in profit, managers can delve further into the firm’s operations using ratio analysis to look for problem areas and address them accordingly. For instance, ratio analysis can allow analysts to view the rate turnover of a specific product line and examine whether something is lacking in that product line that is hindering the firm’s ability to get rid of that inventory to consumers. Such ratio analysis will be elaborated upon later in this paper. There are four types of financial statements; income statements, balance sheets, the statement of retained earnings, and the statement of cash flows, which are all vital and interrelated. The income statement calculates the firm’s net income or its earnings after expenses have been deducted and is used to calculate retained earnings at the end of the year (Parrino, 2011). Net income is calculated as followed: Net Income = Revenues – Expenses The balance sheet summarizes what assets the firm has at a specific point in time, as well as how the firm has financed such assets (Parrino, 2011). Total assets is calculated as followed: Total Assets = Total Liabilities + Total Stockholders’ Equity The value of assets will change annually since firms often buy and sell assets, thus altering the firm’s value and financing. Such changes are indicated in the  statement of cash flows, which gives a summary of changes in the firm’s balance sheet from the beginning of a period to the end (Parrino, 2011). The statement of retained earnings summarizes changes in the retained earnings in a simpler manner for managers than the statement of cash flows and basically shows the firm’s expenses and loss from one period to the next (Parrino, 2011). These financial statements can provide a lot of information to managers regarding the operations of the company. If Microsoft sees a decrease in its net income or total assets from one year to the next, this can indicate many things. A decrease in net income can indicate maybe some products are not selling as well as they have in the past, meaning Microsoft may need to change its marketing strategy or release a new product. A decrease in total assets can mean several things. Perhaps the company’s products are of less value than before or perhaps they have fewer liabilities. Deciding what specifically financial statements mean for the future of a firm often requires more in depth analysis through ratio analysis. Ratio analysis is the use of financial figures to analyze a firm’s overall operability and evaluate its strengths and weaknesses (Parrino, 2011). It can be used from various perspectives including stockholders, managers, and creditors, in order to evaluate the profitability of a firm. Specifically, a financial ratio is a â€Å"number from a financial statement that has been scaled by dividing by another financial number† in order to show something about the company’s operations (Parrino, 2011). There are several types of financial ratios; liquidity ratios, efficiency ratios, leverage ratios, profitability ratios, and market-value indicators. Liquidity ratios focus on whether â€Å"a firm has the ability to convert current assets into cash quickly without loss of value† (Parrino, 2011). Two liquidity ratios are as followed: Current Ratio = Current Assets / Current Liabilities Quick Ratio = (Current Assets – Inventory) / Current Liabilities Liquidity ratios indicate a firm’s ability to pay short-term obligations, such as interest payments for debt. This is very important because every firm has creditors, whether its investors, banks, or even tax collectors and even the most profitable company can go under if it is unable to pay all of its obligations for any reason. Efficiency ratios measure â€Å"how efficiently a firm uses its assets† and include the following: Inventory Turnover = Cost of Goods Sold / Inventory Days Sales in Inventory = 365 Days / Inventory Turnover Accounts Receivable Turnover = Net Sales / Accounts Receivable Days Sales Outstanding = 365 Days / Accounts Receivable Turnover Total Asset Turnover = Net Sales / Total Assets Fixed Asset Turnover = Net Sales / Net Fixed Assets Efficiency ratios are a useful tool in financial analysis because they can examine and identify inefficient use of any kind of asset. For instance, in our case of a decrease net income for Microsoft, financial analysts can look at the inventory turnover for each of its products and analyze whether one is too low indicating that the rate at which they are selling that specific product line is not efficient compared to the cost of producing that product line. Based on this managers can decide whether they should decrease the amount of inventory they produce or cut the product line all together. Leverage ratios are used to examine a firm’s financing or ability to meet long-term financial obligations. Leverage ratios are as followed: Total Debt Ratio = Total Debt / Total Assets Debt-to-Equity Ratio = Total Debt / Total Equity Equity Multiplier = Total Assets / Total Equity Leverage ratios are important because every firm uses debt or equity and often both for its financing, but the more debt a firm uses, the greater the risk it will default on those debt payments. So, for instance, the total debt ratio can tell you how much debt a firm uses in its capital structure and thus how volatile its earnings are (Parrino, 2011). Profitability ratios â€Å"measure management’s ability to efficiently use the firm’s assets to generate sales and manage the firm’s operations† (Parrino, 2011) and include the following: Gross Profit Margin = (Net Sales – Cost of Goods Sold) / Net Sales Operating Profit Margin = EBIT / Net Sales Net Profit Margin = Net Income / Net Sales Return on Assets(ROA) = Net Income / Total Assets EBIT ROA = EBIT / Total Assets Return on Equity(ROE) = Net Income / Total Equity Profitability ratios are important because they indicate a company’s ability to be profitable relative to its expenses. Market-value indicators predict the future of a firm’s finances using market value trends and financial statements. They include: Earnings Per Share(EPS) = Net Income / Shares Outstanding Price-Earnings Ratio(P/E) = Price Per Share / Earnings Per Share Market-to-Book Ratio = Market Value of Equity Per Share / Book Value of Equity per share Market-value indicators are important because they can assist in predicting the future for a firm. Whether the firm will be profitable using its current strategy or should it maybe switch to a different strategy to keep up with competing companies. All of these financial ratios are crucial to financial analysis in corporations and used very often by analysts, managers, creditors, stockholders, etc. Advantages and Disadvantages of Ratio Analysis Ratio analysis has several benefits. First, it offers various methods of analyzing a company’s financial wellbeing, going beyond just the financial statements by looking at specific aspects of operations. This can indicate strengths and shortcomings that managers should be aware of. Improvements can be made in order to increase profitability as a result. For instance, if a Microsoft notices that one product line has a higher days sales in inventory than another, this indicates that the specific product stays on the shelf longer and perhaps the firm should focus more on the product line with the lower days sales in inventory as it sells better. Secondly, ratio analysis can assist in predicting earnings or showing a pattern, which managers can use to find the best way to maintain financial profitability. While financial statements provide numbers such as revenues or expenses, ratio analysis can offer a concrete number describing revenues relative to the cost of the goods sold, such as with the gross profit margin. Such a ratio can indicate how profitable a firm’s operations were in a specific  period of time and if very profitable a concrete method of recreating such success. Essentially, ratio analysis simplifies the information provided in financial statements by compartmentalizing them to show patters and trends, which are very useful. Thirdly, ratio analysis can also be used in order to compare the firm’s operations to that of its competitors. Often, how well a company is doing depends on the market and how well other companies are doing, so ratio analysis provides a very useful tool to companies in making such comparisons. There are some disadvantages to ratio analysis. Predictions based on ratio analysis can be inaccurate from time to time. This is because ratio analysis is mostly based on historical data from previous time periods, which only offers so much information about the future. Yes, analysts can predict that the market will behave a certain way through market value indicators, but such predictions are only so accurate. The market can be affected by a variety of aspects, such as volatile economic conditions or even a natural disaster. For example following Hurricane Katrina, at â€Å"the end of the first week following†¦U.S. commercial crude oil inventories fell by 6.4 million barrels from the previous week,† indicating a strong market effect on petroleum due to the disaster (â€Å"Hurricane Katrina’s impact,† 2011). Businesses cannot control environmental disasters or economic conditions, which is why while ratio analysis is a very useful tool, it cannot always be relied on 100%. The use of market-value indicators is increasingly used in order to better forecast the future of a firm as it takes into account the economic climate at a specific point in time in order to predict the trend of future financial entities (Niazi, 2011) but again sometimes something like a natural disaster can negatively affect business. This is why having a high operating income and total assets is important to be prepared for such events. While not a perfect model as random economic turbulence can skew results, market-value indicators do still provide some insight into the future. Furthermore, when using ratio analysis to compare to another similar benchmark firm, there can also be pitfalls. Often it is impossible to find a company similar enough in size, corporate structure, and operations to properly compare to and gauge a market comparison. Thus, often ratio analysis when benchmarking can provide a skewed impression of where the firm stands against its competitors in the market. Financial statement and ratio analysis are very useful in corporate finance that provide much information to analysts, managers, stockholders, and creditors about the financial state of a firm. While there are some shortcomings to ratio analysis, its advantages in practice surely outweigh its disadvantages and offer valuable tools to cultivate a thriving company. References Hurricane Katrina’s impact on the U.S. oil and natural gas markets. (2011, September 12). Retrieved from http://www.eia.gov/oog/special/eia1_katrina_091205.html Niazi, G. S. K., Hunjra, A. I., Rashid , M., Akbar, S. W., & Akhtar, M. N. (2011). Practices of working capital policy and performance assessment financial ratios and their relationship with organization performance. World Applied Sciences Journal, 12(11), 1967-1973. Parino, R., Kidwell, D. S. & Bates, T. W. (2012). Fundamentals of Corporate Finance: Second edition. John Wiley & Sons; Hoboken, NJ.