{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

CHAPTER 4 - CHAPTER 4 Evaluating a Firm's Financial...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 4 - Evaluating a Firm’s Financial Performance Orientation : Financial analysis can be defined as the process of assessing the financial condition of a firm. The principal analytical tool of the financial analyst is the financial ratio. In this chapter, we provide a set of key financial ratios and a discussion of their effective use. I Financial ratios help us identify some of the financial strengths and weak-nesses of a company. II. The ratios give us a way of making meaningful comparisons of a firm’s financial data at different points in time and with other firms. III. We could use ratios to answer the following important questions about a firm’s operations. A. Question 1: How liquid is the firm? 1. The liquidity of a business is defined as its ability to meet maturing debt obligations. That is— does or will the firm have the resources to pay the creditors when the debt comes due? 2. There are two ways to approach the liquidity question.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern