Most users of financial data are interested in measuring a company s performance throughout the year rather than only once at the end of the fiscal year. Measurement requires data and the primary data source is financial statements. Nonpublic and public companies also generate interim financial statements for internal use as well as to provide to external audiences such as creditors.
Financial ratios are a standard part of any performance analysis.
While the choice of ratios does not change when we use interim instead of yearly data, the character of the data can affect the ratio computations. This note summarizes the necessary computational adjustments. The root of the problem is that there are two different kinds of financial data and these data combine in ratios. Stocks, the first type, are snapshots of a quantity owned or owed at a point in time . All data on the balance sheet are stocks.