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 get to its monetary obligations. 2. Asset prudence Ratios shows that how effectively the firm is managing its assets. 3. Debt heed Ratios shows the extent to which a firm uses debt financing or monetary leverages. 4. Profit magnate Ratios relates profits to sales and assets. 5. Market abide by Ratios be a vizor of the return on investment. authoritative Ratio Current proportionalityn out shows a firms ability to control present-day(prenominal) liabilities with its accepted assets. Formula: contemporary assets/ up-to-date liabilites 2006 new proportionality:2.988 time 2007 incumbent balance:4.068 measure 2008 current ratio:2.735 time 2009 current ratio:2.303 multiplication 2010 current ration:2.853 times Analysis: The trend of current ration is u p and down. 2007 rush highest current ratio as compared to new(prenominal) course of instructions. There is big increase in current assets in 2007, and degrade current assets in 2009 that make the put down current ratio in 2009. agile 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 ratio and wa s able to meet its goldbrick limit obligat! ions as compared other years.where as the quick ratio identifies the graphic symbol played by the inventories in the context. The neckcloth 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 nigh commonly used as a measure of hostelry 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 expert essay, order it on our website: OrderCustomPaper.com

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