Different categories of common financial ratios
Course:- Finance Basics
Reference No.:- EM13840297

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Q1. What is financial system? How it helps firms to raise short term and long term funds requirements?

Q2. What are major components of financial statements? What purposes it serves to its users.

Q3. Define GAAP and its needs in financial decision making. Also discus five important accounting principles.

Q4. What are the different categories of common financial ratios? Explain them with their formulas.


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Financial system is the market place which helps the movement of fund from one with surplus to the one who is in needs. The financial helps the firm in raising short term and long term funds in the following ways:-

An individual or corporation can raise short term fund by issuing short term financial instruments like commercial paper, short term notes etc. through various financial intermediaries to raise short term fund. Similarly, it can raise the same from the bank also.

An individual or corporation can raise long term fund in the form of debt by issuing long term financial instruments like bonds etc. through various financial intermediaries to raise long term fund. Similarly, it can raise the same from the bank also.

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