Formidable Main Financial Ratios
These ratios help assess the valuation of a company and are a primary tool for fundamental analysis.
Main financial ratios. In general financial ratios can be broken down into four main categories. Every financial ratio has a unique profit formula and we cover the most popular ones below. Financial ratios are often divided up into seven main categories.
Receivables and Payables Days. There are dozens in total yet they loosely fit into three headings. Work your way through them to build your understanding.
Introduction to Financial Ratios. Ability to generate types of profit as a proportion of revenue Return ratios ie. Liquidity ratios are the group of financial ratios that measure an entity financial ability to pay its short term debt.
Financial ratios are relationships determined from a companys financial information and used for comparison purposes. Liquidity solvency efficiency profitability market prospect investment leverage and coverage. AQA Edexcel OCR IB Eduqas WJEC.
Investors use financial ratios to investigate a stocks health before investing. This ratio indicates the proportion of equity and debt used by the company to finance its assets. The debt-to-equity ratio is a quantification of a firms financial leverage estimated by dividing the total liabilities by stockholders equity.
These short topic videos make understanding financial ratios a breeze. This article throws light upon the four main types of financial ratios. In this post I will describe the 5 main pillars of ratios and then the 10 most popular financial ratios.