In short, financial ratios are like financial checkups for businesses. They help companies stay on track, make informed decisions, and achieve their long-term financial goals....
Read More
6 Minutes
3 Minutes
Valuation Ratio and Growth Ratios | Accounting – Formulas, Examples, Questions, Answers
Valuation Ratio and Growth Ratios A valuation ratio shows the relationship between the market value of a company or its equity and some fundamental financial metric (e.g., earnings). The point of a valuation ratio...
Read More Profitability Ratio | Accounting – Formulas, Examples, Questions, Answers
Profitability ratios measure a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity.Gross Profit Rate = Gross Profit ÷ Net Sales...
Read More Liquidity Ratio | Accounting – Formulas, Examples, Questions, Answers
Liquidity Ratio Liquidity ratio is a financial ratio that measure a company’s ability to repay both short and long-term obligations. Current Ratio = Current Assets ÷ Current Liabilities It evaluates the ability of a...
Read More Solvency Ratio | Accounting – Formulas, Examples, Questions, Answers
Solvency Ratio A solvency ratio is a performance metric that helps us examine a company’s financial health. In particular, it enables us to determine whether the company can meet its financial obligations in the...
Read More
8 Minutes
Market Value Ratio | Accounting – Formulas, Examples, Questions, Answers
Market Value Ratio Market value ratios are used to evaluate the share price of a company’s stock. It compares the company’s stock price to its earnings or assets. Market ratios show how investors feel...
Read More Efficiency Ratio (Activity Ratio) | Accounting – Formulas, Examples, Questions, Answers
Efficiency Ratio (Activity Ratio) Efficiency ratio, also known as activity financial ratios, are used to measure how well a company is utilizing its assets and resources. Efficiency Ratio Formulas Receivable Turnover = Net Credit...
Read More Leverage Ratio (Debt Ratio) | Accounting – Formulas, Examples, Questions, Answers
Leverage Ratio (Debt Ratio) Leverage ratio in finance is a general term for any technique intended to multiply profits and losses. Common leverage techniques are debt, the purchase of long-term assets and derivatives (such...
Read More