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Financial Statement Analysis - Rotio Analysis

6 important questions on Financial Statement Analysis - Rotio Analysis

What are financial ratio's?

Relationships determined from a firm’s financial information and used for comparison purposes. understand how healthy a company is and how well it has performed

What are short term financial ratios?

short-term solvency ratios as a group are intended to provide information about a firm’s liquidity, and these ratios are sometimes called liquidity measures. The primary concern is the firm’s ability to pay its bills over the short run without undue stress.
-current ratio
-quick (or acid-test) ratio

What are long term fiancial ratios?

intended to address the firm’s long-term ability to meet its obligations, or, more generally, its financial leverage. These are sometimes called financial leverage ratios or just leverage ratios. We consider three commonly used measures and some variations.
-total debt ratio
-times interest earned
-cash coverage

What is asset managment or rurnover measures?

the efficiency with which a company uses its assets. The measures in this section are sometimes called asset utilization 52 ratios. The specific ratios we discuss can all be interpreted as measures of turnover. What they are intended to describe is how efficiently or intensively a firm uses its assets to generate sales.

What are the 3 profitability measures and what does it mean?

to measure how efficiently a firm uses its assets and manages its operations
-profit margin
-return on assets
-return on equity

What is market value measures?

the market price per share of equity. Obviously, these measures can be calculated directly only for publicly traded companies.
-price-earnings ratio
-price-sale ratio
-market-to-book ratio