Financial ratios, Financial Management

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)
Posted Date: 10/1/2012 4:00:10 AM | Location : United States







Related Discussions:- Financial ratios, Assignment Help, Ask Question on Financial ratios, Get Answer, Expert's Help, Financial ratios Discussions

Write discussion on Financial ratios
Your posts are moderated
Related Questions
Calculate the present value and determine the npv, Financial Management. Assume today is 3 December 2009. Helen is 30 years old and has a Bachelor of Business. She is currently em

Q. Illustrate Miller-Orr model recognises? The Miller-Orr model recognises which cash balance requirements are likely to fluctuate and that active management is required in r

The Total Investable Capital Market Portfolio According to a report prepared by McKinsey in January 2007, World financial assets including bonds, stocks, corporate debt securit

please give us the formula of price of equity shares of walter''s and gordon''s model

External Financing with Same Cost of Capital and Same Proportions as Existing: If a firm raises new capital funds in the same proportion as at present and at the same specific cos

Breaks in Specific Cost of Capital: The specific costs of capital may also be affected by the amount of finance the firm wants to raise. As the amount of financing increases, the


The fundamental principle is that when a tree is used to value an on-the-run issue, the resulting value should be arbitrage free i.e., it should be equal to the o

Q. What do you mean by Working Capital? Meaning of Working Capital:- Working capital management is a significant aspect of financial management. In business money is necessar

what is financial management?