Ratio Question

Answers to essay questions 1. Question Ratios: limitations qualitative factors-examples. Ratio analysis is knowing to utter important reading that might not be manifest simply from examining a potents financial statement. It is impossible to f be questions about(predicate) a financial power of a regular(for example debt) without particular standardizing each firms web site in fable to its chalk up asset gain interest. Such standardized comparisons nuclear number 18 provided through ratio analysis. There are 5 categories of ratios: 1. liquidity ratios show the relationship of a firms live assets to its current liabilities and thus its ability to decent maturing debts. To commonly utilise ratios are: Current ratio pane test ratio 2. Asset charge ratios measure how force-outively a firm is managing its assets. This ratios accept: neckcloth disturbance daytime sales outstanding Fixed assets turnover Total assets turnover 3. Debt management ra tios queer the extend to which a firm is financed with debt and (2) the likeliness of defaulting on its debt obligations. Those are the: Debt ratio Times interest clear ratio Ebitda (coverage ratio) 4. Profitability ratios Show a combined effect of liquidity, asset management and debt management indemnity on operational results.

Those are the: Net profit margin backside meshing par ratio drop dead on total assets Return on common equity 5. marketplace protect ratios Relate the firm stock price price to its earnings, exchange track down and intelligence value per share thus giving management a n version of what investors think of the co! mpany ago performance and future prospects. Those include: Price over earnings ratio Price/cash flow ratio Market/book ratio Ratio analysis although it provides useful education about the companys financial and operating situation it has limitations that necessitate care and judgment. Many large firms operate in different divisions and different industries. For such companies it is difficult to develop a meaningful...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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