ACC 280 WEEK 4 DQ 2 - 1. liquidity ratios are useful for...

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Week 4 What three specific ratios (not types) would you list as the most important? Why? Beyond the basic financial statements what other information would you want in order to fully analyze a company’s performance? Why?
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Ratio analysis involves comparing one figure against another to produce a ratio, and assessing whether the ratio indicates a weakness or strength in the company's affairs The Broad Categories of ratios Broadly speaking, basic ratios can be grouped into five categories a. profitability and return b. long-term solvency and stability c. short -term solvency and liquidity ratios d. Efficiency (turnover ratios) e. shareholder's investment ratio Importance of ratios Importance of ratios depends on the user:
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Unformatted text preview: 1. liquidity ratios are useful for short term creditors 2.Efficiency (turnover ratios) are more important for management then other users 3. long term solvency and stability ratios are more useful for lenders who provides finance on long term basis 4. profitability and return ratios are important for investors and internal users 5. shareholder equity ratios are more useful for investors as investors are always interested to know what they will get from their investments . Apart from financial information the perfomance of the compnay may be evaluated by the following three indicators according to balance scorcard approach are: a. Customer satisfaction b. Process c. Growth/learning...
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This note was uploaded on 11/21/2011 for the course ACC 280 280 taught by Professor Lindaking during the Spring '10 term at University of Phoenix.

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ACC 280 WEEK 4 DQ 2 - 1. liquidity ratios are useful for...

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