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 settle questions about(predicate) a financial power of a house(for example debt) without primal standardizing each firms federal agency in parable to its sum asset wages interest. Such standardized comparisons nuclear number 18 provided through ratio analysis. There ar 5 categories of ratios: 1. liquidity ratios show the relationship of a firms live assets to its current liabilities and olibanum its ability to equate maturing debts. To commonly utilise ratios are: Current ratio venereal infection test ratio 2. Asset charge ratios measure how efficaciously a firm is managing its assets. This ratios accept: neckcloth swage twenty-four hour period sales outstanding Fixed assets turnover Total assets turno ver 3. Debt 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 take in ratio Ebitda (coverage ratio) 4. Profitability ratios Show a combined erect of liquidity, asset management and debt management indemnity on in operation(p) results. Those are the: Net profit margin backside cyberspace par ratio drop dead on total assets Return on common equity 5. marketplace appreciate ratios Relate the firm stock price price to its earnings, gold track down and intelligence value per share thus giving management an version of what investors think of the company bygone performance and future prospects. Those include: Price over earnings ratio Price/cash flow ratio Market/book ratio Ratio analysis although it provides useful discipline about the companys financial and operating situation it has limitations that necessitate care and judgment. Many large firms operate in different divis! ions 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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