Course Hero Logo

Endicott, M-FINC300-8.docx - 1 Financial Rations and...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 3 out of 5 pages.

1Financial Rations and Financial AnalysisMary EndicottAmerican Public UniversityFINC300: Foundations in Financial ManagementDr. Edward BalliOctober 29, 2021
2Financial Ratios and Financial AnalysisFinancial ratios are defined as logical information that is connected from acompany’s financial information, this is typically used for comparison purposes internally andexternally to gage the risk of the investment for potential investors and it’s also a good tool forfinancial managers to make future forecasts and oversee the overall health of the business. Thereare many different factors that make financial ratio analysis important but mainly it is used toaccess a company’s liquidity, growth, profits, margins, rates of return and overall valuation.They use the numbers found on a company’s balance sheet, income statements, and cash flowstatements to perform the quantitative analysis of the five different types of ratios.The fivetypes of financial ratios are liquidity ratios which evaluate short term solvency, capital structureratios which evaluate long term solvency, turnover ratios which check the use of availableresources, profitability ratios that evaluate the ability to generate profits, and coverage ratioswhich evaluate the ability to pay interest, dividends and principals. A financial ratio typically isdone for two different reasons, to track the company’s performance and to help them makecomparative analysis regarding their performance. “Determining individual financial ratios per

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 5 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
Finance, Financial Ratio

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture