How to Use Financial Analysis And Ratios to Drive Strategic Growth

7. Real-World Applications of Financial Analysis: What It Enables

How Does It Impact Business Decisions

• Capital investments
• Expansion financing
• Dividend vs. reinvestment strategies

Investor Strategy

• Identify undervalued companies with improving margins or cash flow.
• Avoid firms with unsustainable leverage or poor trend performance.

Corporate Turnarounds

• Starbucks used Zero-Based Budgeting (ZBB) with its “Back to Starbucks” plan. This helped them cut costs and invest in front-line operations (Business Insider).
• Community Health Systems sold hospitals to lower debt. However, reported EBITDA multiples raised concerns. This brought up questions about their valuation and strategy transparency (Axios).

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