Archive about 'Interpretation of Financial Statements'
Profitability Ratio:Gross Profit Margin
Continued from my last article, we now look at the financial ratio for assessing the profitability of a company.
This type of financial ratio should be able to measure the bottom-line results or the profitability of the company.
One typical major Profitability ratio is:
The GROSS PROFIT MARGIN
FORMULA
Gross Profit / Net Sales
MEASURE WHAT
Profitability of trading and mark-up
SCORE [...]
Liquidity Ratio: Current Ratio
Liquidity means the firm’s ability to satisfy its short-term obligations as they come due.
One of the common financial ratio is the
The CURRENTÂ Ratio.
FORMULA
Current Assets /Current Liabilities
MEASURE WHAT
Measure the ability of the company to meet short term obligations namely paying the current liabilities like accounts payable and others. A test of solvency / a [...]
Liquidity Ratio: Quick (Acid-Test) Ratio
Liquidity means the firm’s ability to satisfy its short-term obligations as they come due.
In my earlier article, we have discussed the Current Asset Ratio. Another common financial ratio to measure the liquidity of the company is :
The QUICK (ACID-TEST) RATIO:
FORMULA
Current Assets minus Inventories/Current Liabilities
MEASURE WHAT
Measure the ability to pay urgent liabilities, a MORE stringent [...]
Ratio Analysis: Frequently Asked Questions
QUESTION NO 1: WHAT REALLY IS RATIO ANALYSIS?
Ratio analysis involves methods of calculating and interpreting financial ratios to assess a firm’s financial condition and performance.
QUESTION NO 2: WHO IS INTERESTED IN RATIO ANALYSIS?
Since it’s able to assess a firm’s financial condition and performance, hence it is of Interest to all users group as narrated in [...]
October 11, 2008
- Accounting Test Question No.NT 2 On Non-Trading Organization
- Answer To Accounting Test Question No. Ltd 2 On Limited Companies-Profit & Loss Appropriation Account
- Accounting Test Question No Ltd 2 On Limited Companies
- Accounting Test Question No Ltd 2 On Limited Companies
- Answer To Accounting Test Question No. Ltd 1 On Limited Companies-Profit & Loss Appropriation Account
- Accounting Test Question No Ltd 1 On Limited Companies-Profit & Loss Appropriation Account
- Answer To Accounting Test Question No.Mfg 1 On Manufacturing Account
October 10, 2008


