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This is a list of ratios that one would encounter when working on a financial statement for the first time. There are a number of ratios to remember and its important to understand these ratios when the next financial statement comes in the mail. Since financial statements are based on coming to one’s own conclusion it is important to familiarize yourself with the trends that you will encounter. With constant use of these formulas, it will be easier for one to come to a conclusion. These ratios are used to estimate aspects of the companies operations and financial state.
There are different types of ratios to consider when working on financial analysis. Liquidity ratio, profitability ratios, and leverage ratios determines whether or not a company can manage its expenses and whether or not it can meet obligations. Efficiency, activity, or turnover ratios present the information needed to know about how a company handles its expenses.
These ratios will help those who are new to working on financial analysis. These ratios can be personal or company based. By using these ratios one can familiarize themselves with them and soon grow comfortable enough to use them. ... more>>