Are your enumerated assumptions and defined new-knowledge

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Reference no: EM133376009

Liquidity Ratios - This type of ratio is used to see short-term liabilities and if a business would be able to meet that based on current assets and liabilities. Basically, would a business be able to convert its receivables and inventory into cash, and how fast it can be done to cover liabilities.

Leverage - These ratios are currently how much debt a business has. It is an indicator to investors of how risky an investment would be depending on how much debt is currently being held.

Management Efficiency - This is how effectively a business is managing its assets and liabilities. It gauges if they are selling enough products and services, and building up assets.

Profitability - How effectively a business generates revenue compared to the number of assets they have, not necessarily sales into a profit. Are they gaining more against their assets, breaking even, or falling short?

Market Ratios - These are a way to compare businesses that have equity that can be publicly traded, like the stock market. It is used to compare businesses against each other and how they are valued. It is controlled by supply and demand and allows investors to think of future potential (Gibbons et. al., 2015).

The limitations for all these ratios are that data is constantly changing and it is hard to utilize this data in real-time. Most of the data will be historical and cannot accurately reflect massive changes that can happen internally or externally to an organization.

This article contains some in-depth analysis of financial ratios, examples, and how they are used

Are your enumerated assumptions and defined new-knowledge needs the same as the person you are responding to, or has a colleague offered information new to you? Has the link to an article or a video given you specific information that increased your knowledge? Do not simply offer a response such as this: "I liked your reply. You did a good job of talking about differences," Be specific!

Focus on keywords to help develop your response

Create - offer something new or original.
Evaluate - justify a stand or a decision.
Analyze - draw connections among ideas.

Reference no: EM133376009

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