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INTERPRETING FINANCIAL RESULTS Interpreting Financial Results University of Phoenix Corporate Finance FIN/571 Williams Stokes July 15, 2013 Business owners and entrepreneurs use financial ratios as a measuring analysis tool for management performance and benchmarking. Financial ratios include asset turnover, liquidity, calculations in profitability, and financial leverage. Liquidity ratios aid business managers in determining how well their business can satisfy short-term financial responsibilities. Asset turnover ratios show indicators that inform managers how well the business uses assets to create sales in revenue. By calculating the financial leverage of a business, that business will know its the long-term responsibility. When calculated, profitability ratios show the individual profits that are earned from a good or service. The main reason businesses create a balance sheet is to find out the business working capital (capital that sustains the business). Working capital also refers to the INTERPRETING FINANCIAL RESULTS... View Full Document

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