Financial ratios that measure liquidity include current ratio and quick ratio (Richard). Liquidity ratios give notice (of) ab come to the fore the managements ability to manage its day to day operations. High liquidity ratios are desirable since they quest a low probability of an organization going out of business. Operation performance ratios include fixed asset swage ratio and sales-revenue per employee ratio. Performance ratios tell about the operational efficiency of the management. The firms aim for higher performance ratios because higher efficiency results in higher profits. Profitability ratios include return on right (ROE) and return on assets (ROA) ratio.
Profitability ratios tell how well the organization is doing in terms of generating returns for its shareholders. Debt ratios include debt-equity ratio and interest coverage ratio. Debt ratios give idea about the leverage of the company.
High debt ratios are a cause of concern because they reduce returns for the shareholders since a office of net income is used to pay interest on the debt. enthronisation valuation ratios include monetary value earnings ratio and hurt sales ratio. Investment valuation ratios indicate the price being paid by the shareholders relative to the value of the firm. High price earnings ratio indicates a more optimistic mental capacity of the organizations future but they also dream up the stock is relatively expensive to purchase.
Financial ratios are efficacious tools to opine the performance of the organization but hold small-scale value by themselves. The only reliable way to gauge organizations performance is...If you want to get a full essay, order it on our website: Orderessay
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