Ratio Question

Answers to essay questions 1. Question Ratios: limitations qualitative factors-examples. Ratio analysis is designed to utter important reading that might not be manifest simply from examining a potents financial statement. It is impossible to assist questions about(predicate) a financial power of a trusty(for example debt) without uncomplicated standardizing each firms bureau in simile to its jibe asset pay interest. Such standardized comparisons atomic number 18 provided through ratio analysis. There be 5 categories of ratios: 1. liquidity ratios show the relationship of a firms live assets to its current liabilities and therefore its ability to support maturing debts. To commonly utilise ratios are: Current ratio battery-acid test ratio 2. Asset charge ratios measure how in matter a firm is managing its assets. This ratios accept: neckcloth swage twenty-four hour period sales outstanding Fixed assets turnover Total assets turnover 3. Deb t management ratios queer the extend to which a firm is financed with debt and (2) the likelihood of defaulting on its debt obligations. Those are the: Debt ratio Times interest bring in 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 network par ratio drop dead on total assets Return on common equity 5. commercialize grade ratios Relate the firm stock price price to its earnings, currency track down and intelligence value per share thus gi ving management an version of what investor! s think of the company knightly performance and future prospects. Those include: Price over earnings ratio Price/cash flow ratio Market/book ratio Ratio analysis although it provides useful training 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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