Uses and application of ratios, Finance Basics

Uses and Application of Ratios

Ratios are required in the following ways via managers in different firms.

1. Evaluating the efficiency of assets employment to generate sales revenue that is turnover ratio.

2. Evaluating the capability of the firm to meet its short term financial obligation like and when they fall due as liquidity ratios.

3. To carry out industrial analysis that is compare the firm's performance along with the average industrial performance of the firm by that of individual competitors in the similar industry.

4. For cross sectional analysis that is comparing the performance of the firm by that of individual competitors in the similar industry.

5. For trend/time series analysis such is evaluate the firm over time performance.

6. To establish the extent that the assets of the firm has been financed via fixed charge capital such is use of gearing ratio

7. To predict the bankruptcy of the firm such is utilizing of selected ratios to determine the overall ratio generally called Z-score. The Z-score when compared along with a pre-determined acceptable a Z-score will shows the probability of the bankruptcy of the firm in future.

Posted Date: 1/30/2013 2:23:54 AM | Location : United States







Related Discussions:- Uses and application of ratios, Assignment Help, Ask Question on Uses and application of ratios, Get Answer, Expert's Help, Uses and application of ratios Discussions

Write discussion on Uses and application of ratios
Your posts are moderated
Related Questions
Disadvantages of Payback Period 1. Does not receive into account time value of money and supposes that a shilling obtained in the 1 st year and in the N th year have the sim

I have a question regarding assignment help, once completed, will I receive the assignment via email?

I need to understand a practice question for exam, but I only have a partial solution. I need a more detailed solution, so can understand how to arrive at the answer. The problem

Role of CMA - Share Prices Role of CMA in determination of share prices 1. The CMA does not in any type of way influence share price of quoted companies. 2. The prices o

Why should Roche care about the spreads on debt instruments

What you meant by monetary function in financial system? A significant function of a financial system is the monetary function. The introduction about money in the economy enab

What is the role of a broker in security transactions? How are brokers compensated? Ans: Brokers handle orders to sell or buy securities. Brokers are agents who work in place o

Internal finance can avoid the agency costs of debt and equity finance. In practice it is the most important source of funding. (a) Discuss potential problems of internal financ

1. The Marlin Company operates 50 weeks a year, and its cost of goods sold last year was $1,500,000. The firm carries six items in inventory: three raw materials, two work-in-proce

iwant to learn how todo the maths for accounting