Search results
What are Financial Ratios? Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company.
Corporate finance ratios are quantitative measures that are used to assess businesses. These ratios are used by financial analysts, equity research analysts, investors, and asset managers to evaluate the overall financial health of businesses, with the end goal of making better investment decisions.
- 1MB
- 37
As stated earlier, accounting ratios are an important tool of financial statements analysis. A ratio is a mathematical number calculated as a reference to relationship of two or more numbers and can be expressed as a fraction, proportion, percentage and a number of times.
- 3MB
- 47
Ratio analysis is a useful management tool that will improve your understanding of financial results and trends over time, and provide key indicators of organizational performance.
- 571KB
- 13
Current ratio = Current assets Current liabilities Meaning Ability to meet current liabilities (with total current assets) Quick ratio = Cash + Marketable securities + Receivables Current liabilities Ability to meet current liabilities (with total current assets, excluding inventory) Cash ratio = Cash + Marketable securities Current liabilities
In judging what is a reasonable ratio, a ratio exceeding 2 : 1 may indicate poor use of current assets, such as holding excessive stocks or cash. Usually a ratio of 1 : 1 is regarded as safe, but much depends on the nature of the business – if sales are largely for cash, a lower ratio may well be satisfactory.
Check out more examples www.myaccountingcourse.com/financial-ratios/working-capital-ratio Working Capital Ratio Explanation-The working capital ratio, also called the current ratio, is a liquidity ratio that mea-sures a firm’s ability to pay off its current liabilities with current assets. The working capital ratio is important to creditors be-
