Financial ratios, Financial Management

Assignment Help:

Financial Ratios:

Another method of measuring and monitoring performance is through the use of financial ratios and other comparative tools.

Financial ratios use information contained in reports such as the balance sheet and the profit and loss statement. From this information, calculations can be made which provide an indication as to the overall performance of the business. The results of these calculations can be used to compare the performance of the business against targets (as established in the budgeting process) or against the performance of similar businesses (through benchmarking exercises).

The calculations can take the form of ratios which provide an easy figure by which comparisons are made.

There are many financial ratios that are used to measure financial performance of a business, however for the purposes of this module we will look at the principal ratios used to assess:

  • Liquidity of a business (the ability to meet short term obligations)
  • Profitability of a business (how well the assets are used to create wealth)
  • Solvency of a business (the ability of a business to meet long term financial obligations)

Related Discussions:- Financial ratios

Capital investment plans , Report based on Capital Investment Plans   ...

Report based on Capital Investment Plans   To analyze the capital investment plans of Hatsun Agro Products Limited (HAPL) we shall look at the capital expenditure of HAPL in

Expalin the term mutual funds, Mutual funds Mutual funds pool resources...

Mutual funds Mutual funds pool resources from a lot of individuals and companies and invest these resources in diversified portfolios of bonds, stocks and money market instrume

Define the replacement value of assets method, Why is the replacement value...

Why is the replacement value of assets method not usually used to value complete businesses? The replacement value of assets process is not often applied to complete business v

Explain the methods used to treat the obsolete stock, Explain the methods u...

Explain the methods used to treat the obsolete stock Review Inventory for obsolete items Make materials review board Include an obsolescence review in the closing p

Debt and payment, Jane has agreed to sell her Porshe 911 Cabriolet worth RM...

Jane has agreed to sell her Porshe 911 Cabriolet worth RM1.3 million to Lim for the price of RM 500,000. The decision was made rather hastily as Jane need money to pay her creditor

Explain the various source of finance, Explain in detail various sources of...

Explain in detail various sources of finance. Which is the most appropriate one?

Medium-term notes (mtns) , Medium-term notes are debt instrumen...

Medium-term notes are debt instruments that can be offered continuously to an investor. An agency of the issuer offers these; and these are avai

Role of primary dealers, Role of Primary Dealers To promote the investm...

Role of Primary Dealers To promote the investment activity in the Government Securities market, several countries have adopted licensed Primary Dealers (PDs) as important inter

Which parameter better calculates value creation, Which parameter better ca...

Which parameter better calculates value creation; the EVA (Economic Value Added), the economic profit or the CVA (Cash Value Added)? The EVA (Economic Value Added) is the profi

Risk and return of portfolio, Portfolios are simply combinations of differe...

Portfolios are simply combinations of different securities. The characteristics of investments do differ when we possess them in combinations or portfolios. As we shall see, an ass

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd