Categories Of Financial Ratios

CATEGORIES OF FINANCIAL RATIOS The accounting balances can be grouped in to five categories: 1. Liquidity dimensions shows the extent to which the firm can setting its monetary obligations. 2. Asset prudence Ratios shows that how effectively the firm is managing its assets. 3. Debt direction Ratios shows the extent to which a firm uses debt financing or pecuniary leverages. 4. Profit magnate Ratios relates profits to sales and assets. 5. Market revalue Ratios be a judge of the return on investment. stream Ratio Current proportionalityn out shows a firms ability to sate present-day(prenominal) liabilities with its accepted assets. Formula: contemporary assets/ catamenia liabilites 2006 trustworthy dimension:2.988 time 2007 afoot(predicate) proportion:4.068 measure 2008 period ratio:2.735 quantify 2009 current ratio:2.303 propagation 2010 current ration:2.853 times Analysis: The trend of current ratio n is up and down. 2007 sport highest current ratio as compared to new(prenominal) course of instructions. There is big increase in current assets in 2007, and get off current assets in 2009 that make the glower current ratio in 2009. immediate ratio Quick ratio shows a firms ability to meet current liabilities with its close liquid assets. Formula: current assets-inventories/current liabilities 2006 quick ratio:0.

72times 2007quick ratio:0.44times 2008 quick ratio 0.64 times 2009 quick ratio 0.57times 2010 quick ratio: 0.63times We know that the 2007 have a higher(prenominal) current rati o and was able to meet its fiddling limit ! obligations as compared other years.where as the quick ratio identifies the graphic symbol played by the inventories in the context. The origin is increase year by year, however the 2007 have a higher current liability that 2007 have a lower quick ratio. capital ratio The property ratio near commonly used as a measure of ball club liquidity and how quickly the company can repay its short-run debt. 2006 cash ratio:0.36times 2007 cash ratio 0.12times 2008 cash ratio 0.31times 2009 cash ratio:1.17times 2010...If you loss to get a sound essay, order it on our website: OrderCustomPaper.com

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