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

Calculate debt or equity ratio, Calculate Debt or Equity Ratio XYZ LI...

Calculate Debt or Equity Ratio XYZ LIMITED Key data related to XYZ for last three years is as follows:   2011/12 2010/12

Explain why accounting profits and cash flows, Explain why accounting profi...

Explain why accounting profits and cash flows are not the same thing. Stock worth depends on future cash flows, their riskiness and their timing.  Profit calculations don't con

Companies that would be best able to handle high debt levels, Give two exam...

Give two examples of types of companies that would be best able to handle high debt levels. Companies that manage local telephone service and those that manage natural gas deli

Management information system, Explain the challenges before an E-business ...

Explain the challenges before an E-business management

Risks associated with investing in bonds, Interest rate risk is the risk wh...

Interest rate risk is the risk wherein the investor in bonds faces the risk of a fall in his bond price as and when there is a rise in the market interest r

Theoretical spot rates, The theoretical spot rates for treasury secur...

The theoretical spot rates for treasury securities represent the appropriate set of interest rates that should be used to value the risk from default-free cash fl

Explain the post-acquisition integration plan, Explain the Post-acquisition...

Explain the Post-acquisition integration plan Post-acquisition integration plan Keep  all  channels  of communications open,  by  includin

Explain the various key determinants of initial project cost, Question 1 Th...

Question 1 There are several elements which you can take into consideration, while budgeting a project. Describe these elements Question 2 Explain the different methods/source

Add or Drop Analysis, Lakespring Retirement Village is home to senior citiz...

Lakespring Retirement Village is home to senior citizens who are fairly independent but need assistance with basic health care and occasional meals. Jill Thompson, a licensed beaut

Computation of working capital, Will you please define the working capital ...

Will you please define the working capital and Calculation of working capital? I need urgent help in my assignment. help me!

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