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Unformatted text preview: of time. Long-term creditors and stockholders are interested in a company's long-run solvency, particularly its ability to pay interest as it comes due and to repay the balance of debt at its maturity. Illustration 13-17 Summary of solvency ratios PROFITABILITY RATIOS Profitability ratios (Illustration 13-18 ) measure the income or operating success of a company for a given period of time. A company's income, or lack of it, affects its ability to obtain debt and equity financing, its liquidity position, and its ability to grow. As a consequence, creditors and investors alike are interested in evaluating profitability. Profitability is frequently used as the ultimate test of management's operating effectiveness. Illustration 13-18 Summary of profitability ratios...
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- Spring '11