Free Financial ratio Essays and Papers

Liquidity ratios are used to measure a company’s ability to pay off its short-term debt obligations. This is done by comparing a company’s most liquid assets to its short-term liabilities. When the coverage of liquid assets is greater than short-term liabilities, it is a better indicator that a company can pay off its debts that are due in the near future. Two common ratios used by analysts are the quick ratio and current ratio. Below are Lincoln Electrics trend lines for quick and current ratio from

Investors and other external users of financial information will often need to measure the performance and financial health of an organization. This is done in order to evaluate the success of the business, determine any weaknesses of the business, compare current and past performance, and compare current performance with industry standards. Financially stable organizations are desirable, because a financially stable business is one that successfully ensures its ability to generate income for investors

Financial ratios are important because it takes information from an organizations financial statements and calculates the information into useful information that can be compared to other organization within the same industry. Financial ratios also inform management and investors how well the organization is performing financially and the organizations operating efficiency and profitability. Financial ratios are also important to banks and financial institutions because these ratios determine the

Financial data by itself may not give the complete picture about a company's performance and financial well being. It is difficult to evaluate standalone numbers without comparing them to certain norms and standards. Ratios provide a set of standardised parameters which can be compared across companies. Ratios of a company can be evaluated against industry benchmarks to know the relative position of that company against its peers. There are various types of ratios depending on the nature of analysis

It is one of the important tools to analyze the financial status of a company. It is essentially concerned with the calculation of relationships which after proper identification and interpretation may provide information about the operations and state of affairs of a business enterprise. The analysis is used to provide indicators of past performance in terms of critical success factors of a business. This assistance in decision-making reduces reliance on guesswork and intuition and establishes

Ratio Analysis Financial ratios analysis is conducted by managers, creditors, and investors alike. Ratio analysis uses line items of financial statements, either alone in or conjunction, to help users understand and quantify raw data. Attachment 22 (page XXX) shows the formulas for the financial statement ratios; Attachment 23 (page XXX) presents many the financial ratios for both Dollar Tree and Dollar General. Dollar Tree: Looking at Attachment 23, Dollar Tree’s times-interest-earned (TIE)

Ratio Analysis Liquidity Ratios Current Ratio measures the ability of a firm to meet its short-term (usually up to 1 year) obligations. It is a measure of Liquidity. The higher your Current Ratio is, the greater your short-term solvency. Although there are several ratios which indicate the liquidity of a company, the Current Ratio can provide us with all the information we need. To be really useful we must compare it over at least three years. The Current Ratio is the ratio of total Current Assets

Financial ratios are instrumental in the process of understanding financial statements. Without a method to compare financial statements among different firms, these arbitrary numbers are insignificant in setting a benchmark nor able to reflect a company’s financial standing. Specialized financial ratios help analysts interpret the myriad of numbers in financial statements (Parrino, Kidwell, & Bates, 2012). There are five widely accepted types of financial ratios that a firm utilizes to gain a meaningful

2013 2014 1. Liquidity Ratio: Current Ratio = current asset Current liability 1,180 = 4.291 275 1,140 =5.700 200 Acid Test Ratio = current asset-inventory Current liability 1,180-600 = 2.109 275 1,140-580 =2.800 200 Cash ratio = cash+cash equivalent Current liability 305+165+500 = 3.527 275 270+305+500 =5.375 200 Inventory turnover = sales inventory 1,100 = 1.833 600 1,330 = 2.293 580 Average Collection period = accounts receivable sales x 365 275 = 91 days 1,100x365 290 = 79 days

Financial Stability and Performance Financial Statement and Ratio Analysis Upon examining P&G’s financial ability to meet short-term obligations, it is apparent that not only have their current liabilities exceeded current assets over the last three years, but close to half of their current assets have been tied up in inventories and other illiquid assets. For example, assessing both the quick and current ratio respectively shows that less than 70% of the firm’s current assets could be converted