Search of Identity in Society Free Essays

Character can be commonly characterized as the individual attributes and characteristics which separate every person from the other, anyway in â€Å"The fantasy of the Latin lady: I just met a young lady named Maria† by Cofer, Judith Ortiz and â€Å"The delight of perusing and composing: superman and me† by Alexei Sherman, the two creators exhibit the subject personality in an alternate way. Judith Cofer depicts how the general public regularly generalization people into bunches point of fact, in this specific paper, the hostile generalization of Latino ladies with no specific explanation yet only because of their personality. Alexei Sherman in â€Å"The delight of perusing and composing: superman and me† likewise depicts how society can affect one’s personality; anyway Alexei was resolved to construct himself and challenge the general public in spite of its desires. We will compose a custom paper test on Search of Identity in Society or on the other hand any comparative theme just for you Request Now Similitudes in this specific correlation beat the distinctions; the likenesses which are unmistakably observed between these two short stories are the manner by which the general public disparages individuals and generalization them basically because of their personality. Another basic subject between the two stories is multiculturalism and how it’s confronted. The distinction anyway is the manner by which each creator managed this generalizing and how they characterized their own personality in spite of how individuals interfered with it for them. Desires can change the manner in which an individual feels about carrying on with their life the manner in which they want. Society decides and expects a job that each individual must perform as per who they are, for example, age, sexual orientation, race, ethnic and so forth. In the article the â€Å"The delight of perusing and composing: superman and me†, the writer discusses his life as an Indian kid and how composing and perusing molded his life to what it is today. Sherman discusses how as an Indian kid living in a booking in the United States, Indians were relied upon to come up short and be uneducated; but since he was â€Å"smart, presumptuous and lucky† he thought outside the box and turned into an innovative author. In Cofer’s case there were no mold’s to be broken however simply society’s recognition about Latinas. She gathers all the misguided judgments of Latin ladies, contrasting them and her own encounters Our impression of anything can change and the manner in which we see our selves can some of the time be adjusted by the occasions that occur in our life, our mental self view and confidence can be additionally modified by these occasions as well. Cofer, in her self-portraying short story depicts how she feels like an object of sexual want and an individual of lower class in view of her Puerto Rican ethnicity. She begins the exposition by remembering an episode which happened to her with a tanked man who re-established â€Å"Maria† from West Side Story despite the fact that she was bothered, she attempted to keep her cool when everybody around her was chuckling and hailing. The creator shows how the general public corrupts her since she is basically Latina paying little mind to the way that is she an informed ladies looking for information from Oxford college. Later she states, â€Å"I don't wear my certificates around my neck†-By this Cofer suggests that there are numerous other ladies precisely like her, Latin ladies who do have the benefit of instruction, anyway others inside social orders racial misinterpretations persuade that each Latin lady is either a â€Å"housemaid† or a â€Å"counter girl†-which is clearly not the situation. Cofer proceeds to abstractly investigations and safeguards the negative generalizations that Latin ladies experience. Since something can be normal in a decided culture and hostile in another, it is anything but difficult to track down an assortment of acts that are misjudged. This misjudged is the thing that advances the presence of preference. She gathers all the misguided judgments of Latin ladies, contrasting them and her own encounters. Inevitably the creator attempts to convey a message, a â€Å"universal truth†, is to attempt to supplant the old inescapable generalizations, people ought not be judged totally because of their place of birthplace, â€Å"skin shading, complement or cloths† yet ought to be recognized the truth about. Cofer underscores that â€Å"we can't change this (the legend of Latina as prostitute, household or criminal) by enacting the manner in which individuals take a gander at us the change, from my perspective, needs to happen at a significantly more individual level†. Again this is something which is likewise observed in Sherman’s exposition and it’s clear from his composition. Sherman says he saw the world in sections, this is a figurative term he made.  The most effective method to refer to Search of Identity in Society, Papers

play review :: essays research papers

Play Review           â€Å"COPS† At the point when I discovered that I needed to go to theater Play’s [plays] for class I was anticipating going to them. I advised my significant other that I needed to join in and she needed to go with me. Since I was not very amped up for setting off to a play I let my significant other select the play.      We chose to see â€Å"COPS† at the Steve Allen Theater in Hollywood. The two principle characters are covert Chicago cops. They would consistently go to the cafe promptly toward the beginning of the day and recount accounts of there encounters in the police office. In any case, this specific night would have been unique in relation to some other night. As we continued to enter the theater we strolled up a stairwell to the second floor of the theater. As I entered the theater I was astounded how little it was. The stage was set up as a burger joint in City of Chicago in the 1970’s at around two in the first part of the day. The cafe comprised of a working oven, fricasseeing territory, and all the working eatery hardware. As I strolled into the theater I saw one of the entertainers remaining by the oven cooking what gave off an impression of being bacon. The smell of bacon filled the air. The cook, was likewise filling the role of the proprietor of the coff ee shop, was interfacing with the server as we didn't exist. As I was seating and trusting that the presentation will start I was taking a gander at the stage territory and was dazzled to the detail they put into the set. The set was a little region with around five tables, 4 bar stools, and wood board dividers. I saw their [there] where [were] three entertainers in front of an audience: the server, the cook, and a client perusing a paper and eating his omelet. The lighting was craftsmanship deco plan with fluorescent round balls that hung beneath the roof. The entryway opened in the burger joint, an entertainer strolled into the cafe soaked in water. I could hear the audio cues of the downpour. The on-screen character sat on one of the bar stools in the counter. The entryway opened again and there was one of the fundamental characters of the play. This character was one of the covert police officer’s [officers] that was a customary at the coffee shop. This entertainer gave an incredible presentation. His cooperation with different entertainers was, as they truly were not acting by any means.

Cultural Significance Of The Reformation During The Renaissance Research Paper

Social Significance Of The Reformation During The Renaissance - Research Paper Example This was just a social development that happened around the fourteenth - seventeenth century in Europe. The most amazing element about this period is masterful turns of events. In any case, there were likewise some critical social renewals that will be examined in this paper. At first, Europe had traditionalist customs however indispensable social reconstructions in the renaissance were animated by the renewal in music and strict lessons, and the rise of new imaginative thoughts. This new culture involved a great deal of opportunity and independence as started by the imaginative works of a few artists and craftsmen during the period. The developing imagination prompted craftsmen relinquishing aesthetic methods of the medieval time which were severe in nature. This prompted the advancement of masterful enhancements for instance, authenticity in workmanship. Giottto di Bondone was the main craftsman in the renaissance time frame to regard an artistic creation as a widow into space (Bai nton, 1952). Renaissance prompted recharging of the longing to draw out the magnificence of nature and investigate the aphorisms of feel. This inspired specialists to think of new work of art strategies which included examining human life systems, and light and shadow. Leonardo da Vinci’s Mona Liza Painting is a decent exhibit of the investigation of the human life systems. The aesthetic culture during the renaissance time frame can consequently be portrayed as being dynamic and this prompted advancement of naturalism in painting. The renaissance time frame prompted renewals in the music business for instance, mainstream music increased greater fame. This was invigorated by the advancement of the print machine which empowered music to be printed and spread quicker. These melodies mostly managed military and sentimental topics. The type of the madrigal which was created in Italy spread quick to Netherlands, England France and Germany (Estep, 1986). The move to secularism was f ound in the music business as well as the general society also. This was basically achieved by the progressions that happened in religion and humanism. For instance, a reconstruction in humanism prompted a move in the focal point of life to independence. This is the place every individual should be their own minister with the Bible being the main genuine power (Smith, 1920). As per Hillerbrand (1973), renaissance prompted a move in strict tendencies from Catholism to Protestantism. This is on the grounds that individuals like Erasmus held to and battled on the view that a genuine religion was a demonstration of internal dedication to God as opposed to simple outward images of custom and function. The progressions were additionally a consequence of dissent against the malevolent that individuals found in the Catholic Church for instance wild debasement. The individuals understood that there was a major complexity in the viable existences of the congregation ministry and the conventio ns and lessons they were providing for the individuals. The aftereffect of analysis against the Catholic Church was a misfortune in its position and the development of new protestant holy places and orders. This prompted strict wars and divisions whose main thrust was articulations by the individuals on the requirement for opportunity of articulation and resistance. The renaissance was hence an effective weapon for countering the battle against agnostic human advancement by the Catholic Church. The outcome of the reactions, new strict concentration and stand was secularization of over the top Catholics and the general society (Euan, 1991). An adjustment in the way of life of Christians prompted an adjustment in way of life from having the congregation as the focal point of action into a materialistic sort of life. In this common life, the material world turned into a significant piece of the life of an individual and this supported private enterprise. Individuals become progressivel y worried about cash, common joys and a general solace throughout everyday life. Simultaneously, religion stayed a significant part

Adaptation Mcdonalds

All the more as of late, it additionally offers plates of mixed greens, products of the soil sticks. The business started in 1940, with a café opened by Dick and Mac McDonald in San Bernardino, California. Their presentation of the â€Å"Speedee Service System† in 1948 set up the standards of the advanced drive-through eatery. The current organization dates its establishing to the opening of a diversified café by Ray Kroc, in Illinois on April 15, 1955, the ninth McDonald’s eatery by and large. Kroc later bought the McDonald brothers’ value in the organization and drove its overall development. 3 †¢ What are the points of interest and impediments of adjustment procedure utilized by McDonald’s? 4 1. Points of interest and Disadvantages of adjustment technique Advantages: †¢ Different societies have diverse purchaser needs and tastes †¢ Political and lawful condition of the worldwide market that they intend to enter †¢ Differences among countries as far as societies, strict accepts, political and lawful frameworks, client esteems and ways of life, and phases of financial and market improvement †¢ Differences in the headway of innovation †¢ Competition assumes a significant job in deciding whether an organization will receive an item adjustment plot 1. Points of interest and Disadvantages of adjustment technique Disadvantages: †¢ The expenses related with adjustment can likewise assume a significant job in deciding if a firm decides to normalize their item 6 1. Favorable circumstances and Disadvantages of adjustment technique †¢ Cross any visitor and you will discover different varieties from cost to item, beginning with the introduction. Misguid ed judgment that McDonalds is the equivalent all over the place. Nation groups have impressive self-sufficiency to create and showcase new product offerings. Menu contrasts: Netherlands and Austria†Beer Germany †Chinese Week Canada †Mc Pizza India †Goat and sheep burgers half of menu vegan Japan †fixings, for example, cabbage and Teriyaki USA †Barbecue bacon Burgers, frankfurter breakfast burritos 7 Are there instances of really worldwide brands that never redone? 8 Are there instances of genuinely worldwide brands that never redone? Really worldwide Brands : †¢ as a rule we can say that straight augmentation (=standardization) has been actualized and as of now been fruitful with cameras, purchaser gadgets, and many machine devices. Stihl ( hardware and cutting tool maker) Nikon Olympus, Canon ( camera makers) Kitchen Aid (shopper gadgets ) Caterpillar (trucks, pieces of machinery) †¢ 9 What have been the key factors that have prompted McDonald’s worldwide achievement? 10 2. What have been the key factors that have driven McDonalds to worldwide achievement? †¢ Fast assistance empowered by a restricted menu, center around neatness, family cordial offices, great incentive for cash Emergence of money rich, time-poor way of life Societal acknowledgment of a progressively easygoing way to deal with eating on the run underscored the rise of McDonalds Innovations in food arrangement innovation and administration conveyance offering a quick support design that clients acknowledge just as a cost base that contenders discovered hard to coordinate Waiter work cost investment funds gave legitimately to the shoppers through lower costs McDonalds was the pioneer to present diversifying in the worldwide commercial center, increasing the natural café development by bridling the administration, social and enterprising abilities and capital of neighborhood agents around the globe. Growing over the globe Increasing café infiltration in previously existing markets †¢ 11 2. What have been the key factors that have driven McDonalds to worldwide achievement? Key Faktors: †¢ Economies of scale underway and circulation Power and degree Brand picture was nation fit Ability to use thoughts rapidly and productively Uniformity of promoting rehearses Pervasiveness of McDonalds brand 12 2. What have been the key factors that have driven McDonalds to worldwide achievement? †¢ McDonald’s is viewed as the main agent of the all American way of life, which when the extension started was extremely well known. In certain nations it is as yet a superficial point of interest to proceed to have a dinner at McDonald’s. For the most part the collaboration is making careful effort to offer a determination of normalized center items ( Big Mac, Soft beverages, French Fries) notwithstanding privately acknowledged other options. Giving the worldwide collaboration a nearby Face (considering Salzburg’s eatery) In request to utilize cooperative energies from one viewpoint and decrease national capabilities on the other a supranational managerial office had been set up in Europe. McDonald’s. has consistently been upheld by US international strategy Sources : http://de. wikipedia. organization/wiki/McDonald’s; Kotler/Keller Marketing Management 13 What are the dangers and advantages of picking the diversifying framework for franchisor? 14 3. Dangers and Benefits of establishment framework Benefits for franchisor: The franchisor benefits from the emphatically roused franchisee as a self-subordinate business visionary †¢ The diversifying as an approach to defeat the asset shortage thro ugh the immediate market get to †¢ The capacity to beat the significant expenses of masterminding the new circulation arrange through utilizing the very much custom fitted system of franchisor †¢ Low capital ventures for the item situation and area promoting through the franchisee †¢ The advantages from utilizing a perceived brand name and exchange checks through the notoriety of the franchisor †¢ Extended extension probability through diversifying 15 3. Dangers and Benefits of establishment framework Risks for franchisor: †¢ The presence of various, topographically scattered proprietor directors makes the control troublesome †¢ Possible significant expenses of preparing advancement, limited time and bolster exercises of franchisee †¢ Service conveyance might be conflicting a result of geologically scattered franchisees 16 What are the key issues by setting up a McDonald’s Franchisee? 17 4. Dangers and Benefits of establishment framework Ben efits for the franchisee: †¢ Your business depends on a demonstrated thought. You can check how effective different establishments are before submitting yourself. †¢ You can utilize a perceived brand name and exchange marks. You profit by any publicizing or advancement by the proprietor of the establishment †the â€Å"franchisor†. †¢ The franchisor gives you support †as a rule including preparing, help setting up the business, a manual revealing to you how to maintain the business and continuous exhortation. †¢ Financing the business might be simpler. Banks are once in a while bound to loan cash to purchase an establishment with a decent notoriety. †¢ Risk is diminished and is shared by the franchisor. †¢ If you have a current client base you won't need to contribute time hoping to set one up. Associations with providers have just been set up. †¢ The capacity to beat the asset obliges. 18 4. Dangers and Benefits of establishment framework Risks for franchisee: †¢ Costs might be higher than you anticipate. Jus t as the underlying expenses of purchasing the establishment, you pay proceeding with sovereignties and you may need to consent to purchase items from the franchisor. †¢ The establishment understanding for the most part remembers limitations for how you maintain the business. You probably won't have the option to make changes to suit your nearby market. †¢ The franchisor may leave business, or change the manner in which they get things done. †¢ Other franchisees could give the brand a terrible notoriety. You may think that its hard to sell your establishment †you can just offer it to somebody endorsed by the franchisor. 19 4. Expenses and Restrictions Costs: Financial Requirements/Down Payment : Initial up front installment for opening (40% of the complete expense) or a current eatery (25% of the absolute expense) around 200. 000 $ nonborrowed assets Financing: McDonald’s doesn't offer financing; McDonald’s Owner/Operators appreciate the advantages of our set up associations with numerous national loaning establishments 20 4. Expenses and Restrictions: During the term of the establishment, you pay McDonald’s the accompanying charges: †¢ Service expense: a month to month charge dependent on the restaurant’s deals execution (at present an assistance expense of 4. 0% of month to month deals). Lease: a month to month based lease or rate lease that is a level of month to month deals. †¢ Application: Personal, non-obtained assets to be put resources into a McDonald’s eatery business. †¢ Business involvement with the market where they are looking for an establishment 21 What methodology would you receive to guarantee an incredible introduction for McDonald’s to a developing pattern towards more beneficial eating? 22 5. More advantageous eating at McDonald’s Currently: †¢ Low fat items in UK outlet Canadian light decisions of Menu with a Soya bean McVeggie Burger, plates of mixed greens with a fat free dressing and a granola bested organic product yogurt On bundling calorie and fat substance data just because as it attempts to counter the heftiness entryway †¢ 23 5. More advantageous eating at McDonald’s Future points of view: †¢ Using organically developed assets Fat diminished suppers Healthier methods of handling the food (eg. : don’t fry chips yet prepare them, less white bread burgers, ordinary veggie lover dishes,) Healthy, newly pressed Mc Shakes and so forth. More advantageous Drinks not just Sodas To guarantee high-caliber, new fixings, ranches are set up so as to flexibly cafés 24 Sources: †¢ www. McDonalds. com www. freeforessays. com/show_essay/55461. html D. Agent â€Å"Principles and Practice of Marketing† Sources : http://de. wikipedia. organization/wiki/McDonald’s Kotler/K

Fin?n?i?l R?ti?? for R?ti? An?ly?i?

Fin?n?i?l R?ti?? for R?ti? An?ly?i? L?t’? ??? ??u want to buy a ??m??n?, h?w d? you tr??k the company’s fin?n?i?l h??lth? Or, what if you already ?wn th? ??m??n?, h?w d? ??u figure ?ut h?w w?ll, or h?w b?d that ??m??n? is d?ing?Thi? i? a ?u??ti?n every businessman or woman ??ks.Whether you ?wn yours, or int?r??t?d in buying ?n?, ??u n??d t? kn?w th?t what you are buying will yield profits.Thi? i? wh?r? fin?n?i?l r?ti?? plays a crucial role.Financial ratios h?l? a companys ?wn?r ?r it? ??t?nti?l ?nd current inv??t?r? better und?r?t?nd the overall h??lth of th? ??m??n? ?? w?ll as it? ??nditi?n in v?ri?u? ????ifi? ??t?g?ri??.In addition, tracking fin?n?i?l ratios ?v?r a ??ri?d ?f tim? i? a ??w?rful w?? t? identify tr?nd? in their early stages.R?ti?? ?r? ?l?? used b? l?nd?r? ?nd bu?in??? ?n?l??t? to d?t?rmin? a companys financial stability and ?t?nding. Its im??rt?nt to und?r?t?nd th?t fin?n?i?l r?ti?? ?r? tim? ??n?itiv?; th?? ??n only ?h?w a ?i?tur? of a business at a giv?n tim?. S? th? b??t w?? to u?? financial ratio s i? t? ??ndu?t a r?ti? analysis on a ??n?i?t?nt basis.Fin?n?i?l r?ti?? ?r? u??ful t??l? th?t h?l? ??m??ni?? ?nd investors ?n?l??? ?nd compare r?l?ti?n?hi?? b?tw??n different pieces of fin?n?i?l inf?rm?ti?n across ?n individu?l companys history, ?n industry, ?r ?n ?ntir? bu?in??? sector.Numbers t?k?n fr?m a companys income ?t?t?m?nt, b?l?n?? ?h??t, and cash fl?w statement ?ll?w ?n?l??t? t? ??l?ul?t? ??v?r?l t???? of fin?n?i?l r?ti?? f?r diff?r?nt kind? ?f bu?in??? intelligence ?nd inf?rm?ti?n. F?r r?ti?? to b? useful ?nd m??ningful, they must b?:C?l?ul?t?d u?ing r?li?bl?, ???ur?t? financial information (d??? your fin?n?i?l inf?rm?ti?n reflect ??ur tru? ???t picture?)C?l?ul?t?d ??n?i?t?ntl? from period to ??ri?dU??d in comparison to int?rn?l b?n?hm?rk? ?nd g??l?U??d in comparison t? other ??m??ni?? in ??ur indu?tr?Vi?w?d both ?t a ?ingl? ??int in tim? and as ?n indi??ti?n of broad tr?nd? ?nd i??u?? ?v?r tim?C?r?full? int?r?r?t?d in th? ?r???r ??nt?xt, ??n?id?ring th?r? are m?n? ?th?r im??rt?nt factors and indi??t?r? involved in ??????ing performance.FINANCIAL RATIOS CAN BE DIVIDED INTO FIVE CATEGORIES ACCORDING TO THE INFORMATION THEY PROVIDE1. Liquidit? or Solvency R?ti??A bu?in????? liquidity ?nd ??lv?n?? indi??t?s it? financial w?ll-b?ing, which ultim?t?l? measures th?t bu?in????? ?tr?ngths and sustainability.All ??m??ni?? are required to ??l?ul?t? their li?uidit? ?nd solvency fr?m tim? t? time, but especially wh?n d??l?ring a divid?nd, if a l??n is giv?n t? a director, ?h?r?h?ld?r ?r ?n int?rr?l?t?d entity, ?r in th? case of a merger.Th? Financial Advi??r? and Int?rm?di?r? Services A?t also r??uir?? that ?ll organisations, except th??? r?gi?t?r?d ?? a ??t?g?r? IV with th? Fin?n?i?l Services B??rd, conduct ?n annual ??????m?nt ?f its li?uidit? and solvency.“It is also g??d business ?r??ti?? f?r th? ?wn?r?, shareholders, directors ?r m?n?g?m?nt ?f ?n ?rg?ni??ti?n t? l??k at a ??m??n?’? li?uidit?, ???h flow ?nd current r?ti?? fr?m tim? t? tim? to d?t?rmin? the ‘g?n?r?l w?ll-b?ing’ ?f th? ?ntit?.It i? ????ibl? the first ?nd m??t ????nti?l ??????m?nt r??uir?d for making ??m? bu?in??? decisions â€" such ?? whether ?r n?t t? ?x??nd an ?nt?r?ri??, wh?th?r to inv??t ?x???? fund?, ?nd if funds ?r? needed fr?m external ??ur??? â€" for example.S?lv?n?? ?nd li?uidit? ?r? b?th t?rm? that r?f?r t? ?n enterprise’s state ?f fin?n?i?l h??lth, but with ??m? notable differences.Solvency r?f?r? t? ?n enterprises capacity t? m??t it? long-term financial ??mmitm?nt?.Li?uidit? r?f?r? t? ?n ?nt?r?ri??’? ?bilit? to ??? ?h?rt-t?rm ?blig?ti?n?; th? term ?l?? r?f?r? t? it? ????bilit? t? ??ll ????t? quickly to r?i?? cash.A ??lv?nt company is ?n? that ?wn? more th?n it ?w??; in other w?rd?, it h?? a ???itiv? n?t w?rth ?nd a manageable d?bt l??d.On the ?th?r h?nd, a company with ?d??u?t? liquidity m?? h?v? ?n?ugh cash ?v?il?bl? t? ??? it? bill?.S?lv?n?? and liquidity ?r? ??u?ll? important, ?nd h??lth? ??m??ni?? ?r? both solvent ?nd ??????? ?d??u?t? liqui dity.C?l?ul?ting S?lv?n??A k?? metric used to measure ?n ?nt?r?ri??’? ability to meet it? d?bt and other obligations i? th? S?lv?n?? R?ti? whi?h indicates wh?th?r a ??m??n?’? cash fl?w is sufficient to meet its ?h?rt-t?rm and l?ng-t?rm li?biliti??. The lower a ??m??n?? ??lv?n?? ratio, th? gr??t?r th? ?r?b?bilit? that it will d?f?ult ?n its d?bt ?blig?ti?n?,.The solvency r?ti? i? a comprehensive m???ur? ?f solvency, ?? it m???ur?? cash flow â€" r?th?r th?n n?t in??m? â€" b? including depreciation t? ?????? a ??m??n?’? capacity to ?t?? afloat. It m???ur?? thi? ???h flow ?????it? in r?l?ti?n t? ?ll liabilities, r?th?r th?n ?nl? debt.Apart from d?bt ?nd b?rr?wing?, ?th?r li?biliti?? in?lud? ?h?rt-t?rm ones ?u?h as ????unt? payable and l?ng-t?rm ones such ?? capital l???? ?nd ??n?i?n ?l?n ?blig?ti?n?.”M???uring ???h flow r?th?r th?n net income i? a better d?t?rmin?nt of ??lv?n??, especially f?r companies th?t in?ur l?rg? ?m?unt? ?f depreciation for th?ir ????t? but h?v? l?w level s ?f ??tu?l ?r?fit?bilit?.“Simil?rl?, assessing a company’s ?bilit? t? meet ?ll it? ?blig?ti?n? â€" r?th?r than d?bt ?l?n? â€" ?r?vid?? a m?r? ???ur?t? ?i?tur? of ??lv?n??. A company m?? h?v? a l?w d?bt ?m?unt, but if its cash m?n?g?m?nt ?r??ti??? ?r? ???r ?nd ????unt? ????bl? i? in?r???ing as a r??ult, it? solvency ???iti?n m?? not b? ?? solid ?? w?uld be indi??t?d b? m???ur?? that in?lud? only d?bt.”C?l?ul?ting LiquidityThe liquidity r?ti? ?f a company m???ur?? it? ?bilit? to pay its ?h?rt-t?rm debts. Th?r? ?r? thr?? common ??l?ul?ti?n? for li?uidit? ratios the ?urr?nt r?ti?, th? ??id r?ti?, ?nd th? ???h r?ti?.Th? ?urr?nt r?ti? indi??t?? a companys ability t? pay its current liabilities fr?m its ?urr?nt ????t?. Thi? is ?ft?n used t? ?ui?kl? m???ur? th? li?uidit? ?f a ??m??n?.Thi? method ??n?id?r? ?ll ?urr?nt ????t? ?nd current li?biliti??. Curr?nt assets are th??? ????t? th?t are ?x???t?d t? turn int? cash within one ???r or within the n?rm?l ???r?ting ???l? ?f the entity.E x?m?l?? of ?urr?nt assets are cash, ????unt? r???iv?bl?, ?nd ?r???id ?x??n???. Curr?nt liabilities are th??? d?bt? that ?r? ?x???t?d to be ??id or come du? within a ???r ?r in the n?rm?l operating ???l? ?f the ?ntit?â€" such ?? accounts payable and ???r?ll li?biliti??.”Th? ????nd r?ti? i? th? ??id ratio. Th? ?ur???? ?f thi? r?ti? is t? m???ur? h?w well a ??m??n? ??n meet it? ?h?rt-t?rm ?blig?ti?n? with it? most liquid ????t? th??? that ??n b? ?ui?kl? turn?d int? ???h.Th? fin?l r?ti? is th? ???h r?ti?, whi?h i? an indicator ?f a companys li?uidit? th?t further r?fin?? b?th th? ?urr?nt r?ti? and th? ?ui?k ratio by m???uring th? ?m?unt of ???h, ???h equivalents ?r inv??t?d fund? th?r? ?r? in ?urr?nt assets t? ??v?r ?urr?nt li?biliti??.2. Fin?n?i?l L?v?r?g? or D?bt RatiosFin?n?i?l l?v?r?g? r?ti?? ?r? ?l?? ??ll?d d?bt ratios. You m?? also find th?m ??ll?d long-term ??lv?n?? r?ti??.Th?? measure th? ability ?f th? bu?in??? t? m??t its long-term d?bt ?blig?ti?n?, ?u?h ?? int?r??t ???m?nt ? on d?bt, th? fin?l principal ???m?nt ?n d?bt, ?nd any ?th?r fixed ?blig?ti?n? like lease payments. L?ng-t?rm debt i? d?fin?d ?? ?blig?ti?n? t? r???? with a maturity of m?r? than ?n? year.Th??? r?ti?? ??m??r? th? overall debt l??d of a company to its ????t? or ??uit?, ?h?wing h?w much ?f th? company ????t? b?l?ng t? shareholders v?. creditors.If ?h?r?h?ld?r? own more ????t?, th? ??m??n? i? ??id t? be l??? l?v?r?g?d. If creditors ?wn a m?j?rit? ?f ????t?, th? company i? ??id to b? highl? l?v?r?g?d. Clearly, financial leverage r?ti?? h?l? m?n?g?m?nt and inv??t?r? to und?r?t?nd th? risk l?v?l ?f th? ???it?l ?tru?tur? of a company.L?t? look ?t a f?w of the m??t im??rt?nt ?n??.D?bt R?ti?Th? d?bt ratio m???ur?? a ??m??n?? t?t?l liabilities ?g?in?t it? t?t?l ????t? and is expressed ?? a ??r??nt?g?. It im?li?? the ??m??n?? ?bilit? to ??ti?f? it? li?biliti?? with it? ????t?, ?r h?w m?n? ????t? th? company mu?t ??ll t? pay ?ll it? liabilities. It shows th? companys ?v?r?ll d?bt burd?n.The d? bt ratio i? ??l?ul?t?d b? dividing t?t?l li?biliti?? b? t?t?l ????t?. B?th ?f th??? numb?r? can ???il? b? found on th? balance ?h??t.A lower r?ti?, .5% ?r l???, i? ???n ?? f?v?r?bl?, indi??ting ?t?bilit? and l?ng?vit?. A r?ti? ?f 1 m??n? th?t t?t?l liabilities ??u?l? t?t?l ????t?. In ?th?r words, the company w?uld h?v? t? ??ll ?ff all ?f it? assets in order t? ??? ?ff it? li?biliti??.D?bt t? Equity R?ti?Th? debt t? ??uit? ratio ??m??r?? a ??m??n?? total d?bt to t?t?l ??uit?, indi??ting th? percentage ?f company fin?n?ing that ??m?? fr?m ?r?dit?r? and inv??t?r?.A higher d?bt to ??uit? r?ti? indi??t?? th?t more creditor financing (b?nk l??n?) is used th?n investor financing (shareholders).Th? debt to equity r?ti? i? ??l?ul?t?d by dividing total li?biliti?? by t?t?l ??uit?. Th? d?bt t? ??uit? ratio i? considered a b?l?n?? sheet r?ti? because ?ll ?f th? elements are reported ?n th? b?l?n?? sheet. A d?bt t? ??uit? r?ti? of 1 w?uld m??n that investors ?nd creditors have ?n equal stake in th? bu?in??? assets. A l?w?r d?bt to ??uit? ratio u?u?ll? im?li?? a m?r? fin?n?i?ll? ?t?bl? business.E?uit? RatioTh? Equity r?ti? m???ur?? th? amount of ????t? that ?r? fin?n??d b? ?wn?r? investments by ??m??ring the total ??uit? in the ??m??n? t? th? total ????t?. In other w?rd?, ?ft?r all ?f the liabilities are ??id off, h?w mu?h ?f the remaining ????t? the inv??t?r? will ?nd up with.   Th? equity r?ti? ?l?? m???ur?? h?w mu?h ?f a firm? ????t? w?r? financed b? inv??t?r?, ?r the inv??t?r? ?t?k? in th? company.Th? ??uit? ratio i? calculated b? dividing t?t?l ??uit? b? total ????t?. All ?f the ????t? and ??uit? reported ?n th? b?l?n?? ?h??t ?r? in?lud?d in th? ??uit? ratio calculation. A high?r ??uit? r?ti? i? seen as f?v?r?bl? because it ?h?w? that inv??t?r? h?v? confidence and ?r? willing t? b??k thi? company ?nd th?t th? ??m??n? i? m?r? ?u?t?in?bl? ?nd less ri?k?.Th??? fin?n?i?l leverage r?ti?? ?ll?w th? ?wn?r ?f th? bu?in??? t? d?t?rmin? how w?ll the business can meet it? l?ng-t? rm d?bt ?blig?ti?n?. Th??? ratios ?r? w?rth nothing, ?r very little, in i??l?ti?n. Y?u h?v? t? be ?bl? t? d? tr?nd and indu?tr? analysis to b? able t? d?t?rmin? how w?ll ??u ?r? m?n?ging ??ur d?bt ???iti?n.Th? financial l?v?r?g? ?r d?bt r?ti?? f??u? ?n a firm? ability to m??t it? l?ng-t?rm d?bt ?blig?ti?n?.It looks at th? firm? l?ng term li?biliti?? on th? balance sheet such as b?nd?.Th? most ??mm?n fin?n?i?l l?v?r?g? r?ti?? are th? t?t?l d?bt r?ti??, the d?bt/??uit? r?ti?, th? l?ng-t?rm d?bt r?ti?, th? tim?? int?r??t earned ratio, th? fix?d ?h?rg? coverage ratio, and the ???h ??v?r?g? r?ti?.Alth?ugh ?ll ?lightl? diff?r?nt, these fin?n?i?l leverage ratios ?ll t?ll ??u about different ?????t? ?f th? ??m??n?? overall fin?n?i?l h??lth ?nd, in m??t in?t?n???, quantify ?h?r?h?ld?r equity.3. A???t Effi?i?n?? ?r Turn?v?r R?ti??Th? ????t turnover r?ti?, ?l?? known ?? the total ????t turn?v?r r?ti?, m???ur?? th? ?ffi?i?n?? with whi?h a ??m??n? u??? it? ????t? to generate ??l??. Th? ????t tur nover ratio f?rmul? is ??u?l to net ??l?? divid?d by the t?t?l or ?v?r?g? ????t? ?f a ??m??n?.A ??m??n? with a high ????t turn?v?r ratio operates more efficiently compared t? ??m??tit?r? with l?w?r ratios.A???t Turn?v?r R?ti? F?rmul?Th? f?rmul? for the r?ti? i? as follows: Wh?r?:N?t ??l?? ?r? the ?m?unt ?f r?v?nu? g?n?r?t?d after deducting sales r?turn?, sales discounts, ?nd sales ?ll?w?n???.Average t?t?l assets ?r? th? ?v?r?g? of ?ggr?g?t? ????t? at the ?nd ?f th? current year and preceding ???r. N?t?: ?n ?n?l??t may u?? ?ith?r ?v?r?g? or ?nd-?f-??ri?d assets.Example ?f A???t Turnover RatioC?m??n? A r???rt?d beginning t?t?l ????t? ?f $199,500 ?nd ending t?t?l ????t? ?f $199,203. Ov?r the same ??ri?d, th? company g?n?r?t?d ??l?? of $325,300 with ??l?? returns ?f $15,000.Th? ????t turn?v?r r?ti? f?r C?m??n? A i? calculated ?? follows: Th?r?f?r?, for ?v?r? dollar in t?t?l ????t?, C?m??n? A g?n?r?t?d $1.5565 in ??l??.C?m??ri??n? ?f A???t Turnover R?ti??Consider f?ur hypothetical companies: C?m??n? A, C?m??n? B, C?m??n? C, and C?m??n? D. C?m??ni?? A and B ???r?t? in the f??t-f??d indu?tr?, while ??m??ni?? C ?nd D ???r?t? in th? t?l???mmuni??ti?n? indu?tr?:F??t f??dT?l???mmuni??ti?n?(In dollars)Company ACompany BC?m??n? CC?m??n? DBeginning A???t?$54,341$250,000$75,340$132,434Ending A???t?$55,421$252,000$77,506$134,545Av?r?g? T?t?l A???t?$54,881$251,000$76,423$133,490Net ??l??$43,141$212,134$54,231$75,654Asset Turnover Ratio0.790.850.710.57Th? ????t turnover r?ti? f?r ???h company i? ??l?ul?t?d as net ??l?? divid?d by ?v?r?g? t?t?l assets.A???t ratio ??m??ri??n? across markedly diff?r?nt industries do n?t provide a g??d in?ight into h?w w?ll a ??m??n? i? doing. For ?x?m?l?, it w?uld b? in??rr??t to ??m??r? th? ????t turn?v?r ratio ?f C?m??n? A t? that ?f Company C, ?? th?? operate in different industries.It i? ?nl? ??? r??ri?t? t? ??m??r? th? ????t turnover r?ti? ?f ??m??ni?? ???r?ting in the ??m? industry. In ?u?h ?????, w? can ??? th?t Company B operates more efficiently th?n C?m??n? A.Thi? m?? indicate th?t C?m??n? A i? ?x??ri?n?ing ???r sales ?r that it? fix?d assets ?r? not being utiliz?d t? th?ir full ?????it?.Interpretation ?f the Asset Turnover RatioTh? asset turn?v?r r?ti? m???ur?? how ?ffi?i?ntl? a ??m??n? is u?ing assets t? generate ??l??.Therefore, a high?r r?ti? is f?v?r?bl?, ?? it indi??t?? a more efficient use ?f ????t?.Conversely, a l?w?r r?ti? indicates that th? ??m??n? i? n?t using assets ?? ?ffi?i?ntl? ?? it might. Thi? can be due t? excess production capacity, ???r ??ll??ti?n m?th?d?, ?r ???r inv?nt?r? m?n?g?m?nt.It is im??rt?nt t? ??m??r? the r?ti?? b?tw??n ??m??ni?? operating in th? ??m? indu?tr?, as th? b?n?hm?rk ????t turnover r?ti? v?ri?? gr??tl? depending on the indu?tr?.Industries with a l?w ?r?fit margin t?nd t? g?n?r?t? a high?r r?ti? ?nd ???it?l-int?n?iv? indu?tri?? t ?nd to r???rt a lower r?ti?.Key T?k??w???Th? asset turnover ratio i? ?n ?ffi?i?n?? r?ti? th?t measures h?w ?ffi?i?ntl? a company is u?ing its ????t? to g?n?r?t? sales.C?m??ring th? ????t turn?v?r r?ti?? ?f companies in diff?r?nt industries is n?t ???r??ri?t?, ?? industries vary in ???it?l int?n?iv?n???.A higher ratio, b?tw??n companies in th? same indu?tr?, i? generally ?lw??? f?v?r?bl?, as it indi??t?? ?n efficient u?? of ????t?.A l?w?r ratio, comparing ??m??ni?? in the ??m? indu?tr?, indi??t?? ???r ?ffi?i?n??, which may b? du? t? ???r utiliz?ti?n ?f fix?d assets, poor collection m?th?d?, ?r poor inv?nt?r? m?n?g?m?nt.Th? ????t efficiency ?r turn?v?r ratios m???ur? the ?ffi?i?n?? with whi?h th? firm uses it? assets t? ?r?du?? ??l??. A? a r??ult, it f??u??? ?n both th? income ?t?t?m?nt (??l??) and th? b?l?n?? sheet (assets).Th? m??t common ????t ?ffi?i?n?? ratios ?r? the inventory turnover r?ti?, th? r???iv?bl?? turnover ratio, th? days ??l?? in inventory r?ti?, the days ??l?? in rec eivables r?ti?, the n?t w?rking capital r?ti?, the fix?d ????t turn?v?r r?ti?, ?nd th? t?t?l ????t turnover r?ti?.Th? ????t ?ffi?i?n?? r?ti?? are ??rti?ul?rl? v?lu?bl? in describing the bu?in??? fr?m a d?n?mi? vi?w??int. U??d t?g?th?r, th?? d???rib? how well th? business i? b?ing run h?w fast it? ?r?du?t? ?r? selling, how l?ng customers t?k? to pay and h?w mu?h ???it?l i? ti?d u? in inv?nt?r?.4. Profitability R?ti??Th? profitability r?ti?? ?r? ju?t wh?t th? name im?li??. Th?? f??u? ?n th? firm? ?bilit? to g?n?r?t? a ?r?fit ?nd ?n ?d??u?t? r?turn ?n assets ?nd equity.Th?? measure how ?ffi?i?ntl? th? firm u??? it? ????t? ?nd how ?ff??tiv?l? it manages its ???r?ti?n? ?nd ?n?w?r ?u?h b??i? questions as H?w ?r?fit?bl? i? this bu?in???? ?nd How d??? it m???ur? u? t? its ??m??tit?r??Pr?fit?bilit? r?ti?? ?r? a set of m???ur?m?nt? used to d?t?rmin? the ?bilit? ?f a bu?in??? t? create ??rning?. Th??? r?ti?? are ??n?id?r?d t? b? favorable wh?n they im?r?v? over a trend lin? ?r ?r? comparative ly better th?n the results of ??m??tit?r?.Pr?fit?bilit? ratios are d?riv?d from a comparison ?f r?v?nu?? t? diff?r?n?? gr?u?ing? ?f ?x??n??? within the in??m? statement.The m?in ratios are as follows:Contribution m?rgin r?ti?: Subtracts all v?ri?bl? ?x??n??? in th? in??m? statement fr?m ??l??, and th?n divid?? the r??ult b? sales. Thi? i? u??d to d?t?rmin? th? ?r???rti?n of ??l?? still available after all v?ri?bl? ???t? t? pay f?r fixed ???t? ?nd g?n?r?t? a ?r?fit. Thi? i? u??d for breakeven ?n?l??i?.Gr??? profit r?ti?: Subtr??t? ?ll ???t? r?l?t?d t? th? ???t of g??d? ??ld in the in??m? statement from ??l??, ?nd th?n divid?? th? r??ult by sales. Thi? i? u??d to determine th? ?r???rti?n ?f sales ?till ?v?il?bl? ?ft?r g??d? and services h?v? b??n ??ld t? ??? f?r ??lling ?nd ?dmini?tr?tiv? ???t? ?nd g?n?r?t? a ?r?fit. This r?ti? in?lud?? th? allocation ?f fix?d costs to th? cost ?f g??d? sold, ?? th?t the r??ult tends t? yield a ?m?ll?r ??r??nt?g? th?n the contribution m?rgin r?ti?.N?t profit r?ti?: Subtr??t? all ?x??n??? in the in??m? ?t?t?m?nt fr?m ??l??, and then divid?? th? result by sales. This i? u??d t? d?t?rmin? the net amount ?f ??rning? g?n?r?t?d in a reporting ??ri?d, net of in??m? t?x??. If th? ???ru?l basis ?f ????unting is u??d, thi? ??n r??ult in a figur? th?t is diff?r?nt fr?m wh?t ???h fl?w? would indicate, du? t? the ???ru?l ?f expenses th?t h?v? n?t ??t ???urr?d.A different ?l??? ?f profitability ratios ??m??r? th? results listed on th? income ?t?t?m?nt to th? inf?rm?ti?n ?n th? b?l?n?? ?h??t.The int?nt ?f these m???ur?m?nt? i? t? examine the efficiency with which m?n?g?m?nt ??n ?r?du?? profits, in ??m??ri??n t? th? amount of ??uit? or ????t? ?t th?ir disposal. If th? outcome ?f th??? m???ur?m?nt? i? high, it im?li?? th?t r???ur?? usage h?? b??n minimiz?d.Th? main ratios in thi? ??t?g?r? ?r?:R?turn ?n assets: Divides n?t ?r?fit? by th? t?t?l ?m?unt ?f ????t? on th? balance sheet. The m???ur?m?nt can be im?r?v?d b? u?ing a tight ?r?dit policy to r?du?? th? amount of accounts receivable, a ju?t-in-tim? ?r?du?ti?n ???t?m to r?du?? inv?nt?r?, ?nd b? selling ?ff fix?d ????t? th?t are r?r?l? u??d. Th? r??ult varies by indu?tr?, ?in?? ??m? indu?tri?? r??uir? f?r m?r? ????t? th?n ?th?r?.R?turn on ??uit?: Divid?? n?t ?r?fit? b? th? t?t?l ?m?unt ?f equity ?n the b?l?n?? ?h??t. Th? m???ur?m?nt can b? im?r?v?d b? funding a larger ?h?r? ?f ???r?ti?n? with d?bt, ?nd b? u?ing d?bt t? buy b??k shares, th?r?b? minimizing th? use of ??uit?. D?ing so can b? risky, if a bu?in??? d??? not experience ?uffi?i?ntl? ??n?i?t?nt ???h flows t? pay off th? d?bt.Wh?n u?ing profitability r?ti??, it i? b??t to ??m??r? a ??m??n?? r??ult? f?r the ?urr?nt ??ri?d to the r??ult? for th? ??m? ??ri?d in th? ?r???ding year. Th? r????n i? th?t m?n? ?rg?niz?ti?n? have ?????n?l sales, which ??u??? th?ir profitability r?ti?? t? vary considerably ?v?r th? ??ur?? ?f a ???r.5. M?rk?t V?lu? R?ti??Th? market v?lu? r?ti?? can b? calculated f?r ?ubli?l? traded ??m??ni?? ? nl? ?? they relate t? ?t??k ?ri??. M?rk?t value r?ti?? help ?v?lu?t? the economic status of ?ubli?l? tr?d?d ??m??ni?? and ??n ?l?? a role in identifying ?t??k? th?t m?? b? ?v?rv?lu?d, und?rv?lu?d, ?r priced f?irl?.Alth?ugh a wid? variety ?f m?rk?t value r?ti?? ?r? in use, the m??t popular in?lud? ??rning? ??r ?h?r?, book value ??r share, ?nd th? ?ri??-??rning? r?ti?. Oth?r? include the price/cash r?ti?, divid?nd ?i?ld ratio, m?rk?t v?lu? per share, ?nd th? market/book r?ti?.E??h of th??? m???ur?? i? u??d in a different way, but when combined, th?? ?ff?r a ?r?tt? ???ur?t? fin?n?i?l ??rtr?it of ?ubli?l? traded companies. In addition, m?rk?t value ratios can h?l? giv? m?n?g?m?nt ?n id?? ?f what a firms investors think of it? performance and futur? ?r?????t?.Th??r? ?l?? u??d to analyze ?t??k trends, ?lth?ugh ??m? ??nt?xt i? necessary. F?r example, a companys l?w ?ri??-??rning? r?ti? m?? indicate th? stock i? ?n und?rv?lu?d b?rg?in in a ?t?bl? indu?tr?, but it ?l?? ??uld indi??t? th? com panys ??rning? prospects ?r? r?l?tiv?l? un??rt?in, and th? ?t??k m?? be a ri?k? b?t.Th?t? wh? you ?lw??? ?h?uld consider v?ri?u? f??t?r?, including a r?ng? ?f m?rk?t value r?ti??, when m?king a d??i?i?n ?b?ut an inv??tm?nt. A ?t??k with one gr??t-l??king m???ur? could b? ?n undiscovered g?m, or it ??uld b? a dud th?t? under-priced f?r a reason.E?rning? P?r Sh?r?E?rning? ??r ?h?r? m???ur?? a companys n?t in??m? per ?h?r? ?f ?ut?t?nding stock, indi??ting a ??m??n?? ?r?fit?bilit? to inv??t?r?.Calculate earnings per ?h?r? b? dividing th? ??m??n?? n?t income by th? number ?f ?ut?t?nding shares (stock ?urr?ntl? h?ld by ?ll shareholders).F?r example, if a ??m??n? h?? $10 milli?n in net in??m? ?nd 4 milli?n ?ut?t?nding ?h?r??, th? earnings per ?h?r? w?uld be $10 million divid?d by 4 milli?n, whi?h is $2.50.Book V?lu? Per ShareTh? book v?lu? is a ??m??n?? equity th?t does not in?lud? ?r?f?rr?d stock divid?d b? the ?h?r?? ?ut?t?nding in the m?rk?t.F?r ?x?m?l?, if a companys t?t?l assets equal $15 milli?n ?nd it? t?t?l liabilities ??u?l $5 million, th? t?t?l equity would b? $10 milli?n. If the ??m??n? h?? $2 milli?n in preferred ?t??k, d?du?t th?t t? get $8 milli?n, th? ?m?unt ?v?il?bl? t? common shareholders. If th?r? are 1 million ?ut?t?nding ?h?r??, the b??k v?lu? ??r ?h?r? would be $8, or $8 million divided b? 1 milli?n.M?rk?t V?lu? Per Sh?r?Market v?lu? ??r ?h?r? i? the m?rk?t v?lu? ?f a ??m??n? divid?d by th? t?t?l numb?r ?f ?ut?t?nding ?h?r??. Thi? ?uit? ?im?l? i? the g?ing r?t? f?r a ?h?r? ?f common ?t??k.The m?rk?t v?lu? ?f th? ??m??n? can b? determined by multi?l?ing th? ?ri?? ?f it? ??mm?n ?t??k b? th? numb?r of ?ut?t?nding shares.Market/Book (M/B) RatioWith the m?rk?t/b??k r?ti?, ?n?l??t? ??n ??m??r? a companys market v?lu? to it? b??k v?lu?, Th? r?ti? can be ??l?ul?t?d b? dividing th? market v?lu? ??r ?h?r? by th? b??k value ??r ?h?r?.For example, if a ??m??n? has a b??k v?lu? ??r ?h?r? ?f $8 ?nd th? ?t??k ?urr?ntl? i? v?lu?d at $10 ??r ?h?r?, th? M/B r?ti? w?uld b? calculated b? dividing $10 (?t??k price) b? $8 (b??k v?lu? per ?h?r?).Thi? would give ??u a r?ti? ?f 1.25. In other words, th? m?rk?t v?lu? of a ?h?r? of ?t??k i? 25 ??r??nt gr??t?r th?n its b??k v?lu?. A r?ti? ?f l??? than 1 ??n m??n a ?t??k might b? undervalued, whil? a r?ti? gr??t?r th?n 1 might mean it i? ?v?rv?lu?d.Pri??-E?rning? (P/E) R?ti?The ?ri??-??rning? ratio i? th? ?urr?nt ?ri?? ?f th? stock divid?d b? th? earnings ??r ?h?r?. E?rning? g?n?r?ll? are calculated b? looking ?t th? last four ?u?rt?r? ?f fin?n?i?l r??ult?.F?r ?x?m?l?, if a ?t??k i? tr?ding ?t $25 per share ?nd their ??rning? ??r share i? $2.50, the P/E ratio w?uld b? $25 divided by $2.50, whi?h ??u?l? a ratio of 10-t?-1.An?l??t? also m?? talk ?b?ut a f?rw?rd P/E r?ti?, which i? the ??tim?t?d P/E r?ti? f?r th? n?xt four quarters.Pri??/C??h RatioThe ?ri??/???h r?ti? ??m??r?? th? price of a companys stock to it? cash flow.To ??l?ul?t? this r?ti?, simply divid? th? m?rk?t v?lu? of a ?h?r? b? the ?m?unt ?f ???h fl?w ??r ?h?r?. Cash fl?w per share i? the ?m?unt ?f ???h a company has on h?nd ?ft?r t?king depreciation into ????unt.For example, if th? ?ri?? of a ??m??n?? ?t??k is $20 per ?h?r? ?nd th? ??m??n? has cash flow ?f $10 ??r ?h?r?, the ?ri??/???h r?ti? w?uld be $20 divid?d b? $10, whi?h ??u?l? 2. T??i??ll?, a lower numb?r h?r? is b?tt?r because th?t means gr??t?r cash fl?w.Divid?nd Yield R?ti?An?l??t? arrive at th? divid?nd ?i?ld ratio b? dividing the t?t?l dividend payments paid per ???r b? the m?rk?t ?ri?? ?f th? stock.For ?x?m?l?, if a ??m??n? pays out divid?nd? ?u?rt?rl? in th? ?m?unt? ?f $2.25, $2.50, $2.50, ?nd $2.75, th? t?t?l divid?nd ???m?nt? f?r th? ???r would be $10. If the price of th? stock i? $100, ??u w?uld divid? $10 (dividend payments) by $100 (?t??k price).The ?n?w?r i? 0.10, ?r 10 ??r??nt.Kn?wing thi? ratio h?l?? you to b?tt?r und?r?t?nd th? return on your inv??tm?nt ??u ??n r??li?ti??ll? ?x???t.Who ?r? the u??r? of financial r?ti???Financial ratio ?n?l??i? is aimed t? ?????? th? fin?n?i?l ??rf?rm?n?? ?nd d?t?rmin? th? fin?n?i?l ???iti?n ?f ?n organization thr?ugh it? profitability, liquidity, ??tivit?, l?v?r?g? and ?th?r relevant indi??t?r?.Th?r? ?r? many groups and individuals with diverse and conflicting interests but w?nt t? kn?w ?b?ut th? bu?in??? ??rf?rm?n?? ?r position. In the following t?bl? major u??r? ?f financial ?t?t?m?nt? with th?ir areas ?f interest ?r? d???rib?d.Bankers ?nd L?nd?r?: Use ?r?fit?bilit?, li?uidit? and investment b???u?? they want t? know the ability ?f the b?rr?wing business in r?gul?r ??h?dul?d int?r??t ???m?nt? and r????m?nt? ?f ?rin?i??l loan ?m?unt.Investors: U?? profitability and investment b???u?? they are m?r? interested in ?r?fit?bilit? ??rf?rm?n?? ?f bu?in??? ?nd safety ???urit? ?f their investment ?nd growth potential of th?ir investment.G?v?rnm?nt: Use profitability b???u?? government m?? u?? ?r?fit ?? a b??i? for t?x?ti?n, gr?nt? and ?ub?idi??.Employees: Use profitability, li?uidit? ?nd activity b???u?? ?m?l????? will b? ??n??rn?d with j?b security, b?nu? ?nd ??ntinu?n?? of bu?in??? ?nd w?g? b?rg?ining.Customers: U?? li?uidit? because customers will seek reassurance that the bu?in??? can ?urviv? in the short t?rm and continue to ?u??l?.Su??li?r?: U?? li?uidit? because suppliers ?r? m?r? interested in knowing the ?bilit? ?f th? bu?in??? t? settle its short-term obligations ?? and wh?n they ?r? due.M?n?g?m?nt: Use ?ll r?ti?? because m?n?g?m?nt is int?r??t?d in ?ll ?????t? i.?., b?th fin?n?i?l performance and fin?n?i?l ??nditi?n of the bu?in???.Suppliers: Suppliers will want t? kn?w if their customers ??n ?ff?rd t? ??? their bill?. Th?? will l??k ?t th? ???h in th? business. Liquidity R?ti?? th?t ?n?l??? li?uidit? will help. Examples of th??? in?lud? the ?urr?nt r?ti? and quick r?ti?.Own?r?: Own?r? ?f th? bu?in??? m?? want t? review how sales ?r? performing, ?? th? r?turn ?n ??l?? ratio m?? b? im??rt?nt. Th?? will want to check ?r?fit?bilit? r?ti??. How g??d ?r? th? gross ?r?f it margins ?nd n?t ?r?fit m?rgin??Of course cash fl?w i? ?xtr?m?l? im??rt?nt ?? a k?? area ?f f??u? will b? ?n th? w?rking ???it?l ratios. Th??? m?? in?lud? th? trade accounts receivable ratio, tr?d? accounts ????bl? r?ti? ?nd inv?nt?r? turn?v?r ratio.M?n?g?r?/Dir??t?r?: Int?rn?l u??r? ?f ????unting inf?rm?ti?n will ?f ??ur?? in?lud? key m?n?g?r? ?nd dir??t?r? in th? bu?in???. Th?? m?? n??d th?ir own d???rtm?nt/divi?i?n inf?rm?ti?n. Thi? mix f?r example may inv?lv? ?r?fit?bilit? r?ti??, ??l?? r?ti??, earnings ratios, d?bt/??uit? ratios, cash ??ll??ti?n ??ri?d?, ????unt? ????bl? d???.LIMITATIONS OF RATIO ANALYSISR?ti? ?n?l??i?, with?ut a d?ubt, i? ?m?ng?t th? m??t powerful t??l? for fin?n?i?l ?n?l??i?.An? inv??t?r, who w?nt? to be m?r? ?ffi?i?nt at th?ir j?b, mu?t d?v?t? more tim? towards und?r?t?nding r?ti?? ?nd ratio ?n?l??i?.H?w?v?r, thi? does not m??n th?t it is fr?? ?f limit?ti?n?. Like all techniques, fin?n?i?l r?ti?? h?v? th?ir limit?ti?n? t??.R?ti? analysis i? treated as a kn ife. If a knife i? u??d by a d??t?r, h?/?h? ??n ??v? th? lif? ?f hum?n beings during the operation. At th? ??m? tim?, a knife is u??d b? a kitchen master, he/she ??n cut th? fruit? and v?g?t?bl?? f?r early ??m?l?ti?n ?f th? f??d ?r???r?ti?n.Lik?wi??, a knife i? u??d b? ?ul?rit, he/she can put ?n ?nd t? lif? ?f human b?ing.H?n??, it i? n?ti??d th?t und?ubt?dl?, r?ti? ?n?l??i? i? a tool ?v?il?bl? in th? hands of ?n?l??t ?nd th? ?ignifi??n?? ?f ratio ?n?l??i? i? b???d ?n it? u??g?.“The ratio ?n?l??i? i? ?n ?id t? m?n?g?m?nt in t?king ?r?dit decisions but ?? a mechanical ?ub?titut? f?r thinking ?nd judg?m?nt, it is w?r?? than u??l???”. Hunt, Willi?m? ?nd DonaldsonR?ti? analysis ?uff?r? fr?m ??rt?in limitations ?v?n th?ugh th?? are ???il? calculated ?nd und?r?t??d. Such limitations are given b?l?w.Misleading Fin?n?i?l St?t?m?nt?The fir?t and foremost thr??t t? r?ti? analysis i? d?lib?r?t? mi?l??ding ?t?t?m?nt? i??u?d by the m?n?g?m?nt.The m?n?g?m?nt ?f most ??m??ni?? i? aware that in v??t?r? l??k at certain numb?r? lik? sales, earnings, ???h fl?w etc very ??ri?u?l?. Oth?r numb?r? on th? fin?n?i?l ?t?t?m?nt? d? not g?t ?u?h ?tt?nti?n. They th?r?f?r? m?ni?ul?t? th? numb?r? within the l?g?l framework t? m?k? im??rt?nt m?tri?? l??k g??d.Thi? i? a common ?r??ti?? ?m?ng?t publically li?t?d ??m??ni?? ?nd is called “Wind?w Dr???ing”. Investors need t? b? ?w?r? ?f such window dr???ing ?nd mu?t be careful in calculating and int?r?r?ting r?ti?? b???d ?n th??? numb?r?.In??m??r?bilit?C?m??ri??n i? th? ?rux ?f ratio analysis. On?? ratios h?v? b??n calculated, th?? n??d t? b? ??m??r?d with ?th?r ??m??ni?? ?r over tim?.However, many tim?? ??m??ni?? h?v? accounting ??li?i?? th?t d? n?t m?t?h with ???h ?th?r.Thi? m?k?? it im????ibl? t? have ?n? m??ningful r?ti? ?n?l??i?. R?gul?t?r? ?ll ?v?r th? w?rld ?r? ?triving t? make fin?n?i?l ?t?t?m?nt? ?t?nd?rdiz?d.H?w?v?r in m?n? ?????, ??m??ni?? can ?till ?h???? ????unting ??li?i?? whi?h will make th?ir statements incomparable.Qualita tive FactorsC?m??ri??n ?v?r time is ?n?th?r im??rt?nt t??hni?u? used in r?ti? analysis. It i? ??ll?d horizontal analysis. H?w?v?r, m?n? tim?? comparison ?v?r tim? i? m??ningl??? b???u?? of inflation.Tw? ??m??ni?? m?? b? u?ing th? ??m? m??hin? with th? ??m? ?ffi?i?n?? but one will h?v? a b?tt?r r?ti? because it b?ught th? m??hin? earlier at a l?w ?ri??.Al??, ?in?? the m??hin? w?? ?ur?h???d earlier, it may b? ?l???r to impairment. But th? ratio d??? n?t r?fl??t thi?.Subj??tiv? Int?r?r?t?ti?nFin?n?i?l r?ti?? ?r? established “thumb of rul??” ?b?ut the w?? a business should operate.H?w?v?r ??m? ?f th??? rul?? ?f thumb have b???m? obsolete. Th?r?f?r? when ??m??ni?? come with a n?w kind ?f bu?in??? m?d?l, r?ti?? ?h?w th?t th? ??m??n? i? n?t a g??d inv??tm?nt. In reality th? company i? ju?t “un??nv?nti?n?l”.M?n? may ?v?n ??ll these ??m??ni?? inn?v?tiv?. R?ti? ?n?l??i? of ?u?h ??m??ni?? does not ?r?vid? m??ningful inf?rm?ti?n. Inv??t?r? must l??k furth?r to make their decisions.F?l?? R??ult? if B???d on In??rr??t A???unting DataA???unting r?ti?? ??n b? ??rr??t only if th? d?t? (?n which th?? ?r? based) ?r? ??rr??t. S?m?tim??, the inf?rm?ti?n given in th? financial ?t?t?m?nt? i? affected b? wind?w dr???ing, i.?., showing ???iti?n b?tt?r than what actually is.F?r ?x?m?l?, if inv?nt?r? v?lu?? ?r? infl?t?d ?r depreciation i? n?t ?h?rg?d ?n fix?d assets, not only will ?n? have an ??timi?ti? vi?w ?f profitability ?f the ??n??rn but ?l?? of its fin?n?i?l ???iti?n.S? th? ?n?l??t mu?t ?lw??? b? ?n th? l??k-?ut for ?ign? ?f wind?w dressing if any.No Idea ?f Pr?b?bl? Happenings in FutureR?ti?? are ?n attempt t? make ?n analysis ?f the ???t fin?n?i?l ?t?t?m?nt?; so they are hi?t?ri??l d??um?nt?.Now-a-days keeping in vi?w th? ??m?l?xiti?? ?f the business, it i? im??rt?nt t? h?v? an id?? ?f the ?r?b?bl? happenings in future.Variation in A???unting M?th?d?The tw? firms’ r??ult? ?r? comparable with the h?l? of ????unting ratios ?nl? if th?? f?ll?w the same accounting methods or b????. C?m??ri??n will b???m? difficult if th? tw? ??n??rn? f?ll?w the different m?th?d? of providing d??r??i?ti?n or valuing ?t??k.Simil?rl?, if th? tw? firm? ?r? f?ll?wing tw? diff?r?nt ?t?nd?rd? and m?th?d?, ?n ?n?l??i? by r?f?r?n?? t? th? r?ti?? w?uld b? mi?l??ding. M?r??v?r, utilisation ?f inbuilt f??iliti??, ?v?il?bilit? ?f f??iliti?? ?nd ???l? of ???r?ti?n would affect fin?n?i?l ?t?t?m?nt? ?f diff?r?nt firm?.C?m??ri??n ?f fin?n?i?l ?t?t?m?nt? ?f ?u?h firm? by m??n? of r?ti?? i? b?und to be misleading.Price Level ChangesChanges in ?ri?? l?v?l? make comparison f?r v?ri?u? ???r? diffi?ult. F?r ?x?m?l?, the r?ti? ?f ??l?? to t?t?l ????t? in 1996 w?uld be mu?h higher than in 1982 due t? rising ?ri???, fix?d ????t? being ?h?wn ?t ???t ?nd n?t ?t market ?ri??.Only On? Method ?f An?l??i?R?ti? analysis i? only a b?ginning and giv?? just a fr??ti?n ?f inf?rm?ti?n needed f?r d??i?i?n-m?king. So, t? h?v? a ??m?r?h?n?iv? analysis ?f financial ?t?t?m?nt?, ratios should be u??d along wi th ?th?r methods of analysis.No C?mm?n St?nd?rd?It i? very diffi?ult to lay d?wn a ??mm?n ?t?nd?rd f?r comparison b???u?? ?ir?um?t?n??? differ fr?m concern to concern and the n?tur? ?f each indu?tr? is diff?r?nt. F?r ?x?m?l?, a bu?in??? with current ratio ?f m?r? th?n 2:1 might not be in a ???iti?n to pay ?urr?nt li?biliti?? in tim? b???u?? of ?n unfavorable di?tributi?n of ?urr?nt ????t? in r?l?ti?n t? li?uidit?.On th? other hand, another bu?in??? with a ?urr?nt r?ti? of ?v?n less than 2 : 1 might n?t be ?x??ri?n?ing any difficulty in m?king the ???m?nt of ?urr?nt li?biliti?? in time b???u?? ?f its favourable distribution ?f current assets in r?l?ti?n t? li?uidit?.Diff?r?nt M??ning? A??ign?d to the Same T?rmDiff?r?nt firms, in ?rd?r to calculate r?ti? m?? assign different m??ning?. F?r ?x?m?l?, profit for the ?ur???? of calculating a r?ti? may be t?k?n ?? profit b?f?r? ?h?rging int?r??t ?nd tax or profit b?f?r? t?x but ?ft?r interest ?r profit ?ft?r tax ?nd interest.Thi? m?? affect th? ??l?ul?ti?n ?f ratio in diff?r?nt firm? ?nd such r?ti? wh?n u??d f?r ??m??ri??n may l??d t? wrong conclusions.Ignores Qu?lit?tiv? F??t?r?A???unting r?ti?? ?r? t??l? ?f ?u?ntit?tiv? ?n?l??i? ?nl?. But ??m?tim?? qualitative factors may ?urm?unt the quantitative aspects. Th? calculations d?riv?d fr?m th? ratio ?n?l??i? und?r such ?ir?um?t?n??? may get distorted.F?r ?x?m?l?, th?ugh ?r?dit m?? b? granted to a ?u?t?m?r ?n th? basis of information r?g?rding hi? fin?n?i?l position, ??t th? grant ?f ?r?dit ultim?t?l? d???nd? ?n d?bt?r’? ?h?r??t?r, h?n??t?, ???t r???rd and his managerial ?bilit?.No u?? if R?ti?? ?r? worked ?ut f?rm In?ignifi??nt ?nd Unr?l?t?d FiguresA???unting ratios m?? b? w?rk?d f?r ?n? tw? in?ignifi??nt ?nd unr?l?t?d figures as ratio of sales and inv??tm?nt in g?v?rnm?nt securities. Such ratios may b? misleading. Ratios should b? calculated ?n th? b??i? ?f ??u?? ?nd effect r?l?ti?n?hi?.One ?h?uld be ?l??r ?? t? wh?t ??u?? i? and wh?t ?ff??t i? b?f?r? ??l?ul?ting a r ?ti? b?tw??n two figures.

Fin?n?i?l R?ti?? for R?ti? An?ly?i?

Fin?n?i?l R?ti?? for R?ti? An?ly?i? L?t’? ??? ??u want to buy a ??m??n?, h?w d? you tr??k the company’s fin?n?i?l h??lth? Or, what if you already ?wn th? ??m??n?, h?w d? ??u figure ?ut h?w w?ll, or h?w b?d that ??m??n? is d?ing?Thi? i? a ?u??ti?n every businessman or woman ??ks.Whether you ?wn yours, or int?r??t?d in buying ?n?, ??u n??d t? kn?w th?t what you are buying will yield profits.Thi? i? wh?r? fin?n?i?l r?ti?? plays a crucial role.Financial ratios h?l? a companys ?wn?r ?r it? ??t?nti?l ?nd current inv??t?r? better und?r?t?nd the overall h??lth of th? ??m??n? ?? w?ll as it? ??nditi?n in v?ri?u? ????ifi? ??t?g?ri??.In addition, tracking fin?n?i?l ratios ?v?r a ??ri?d ?f tim? i? a ??w?rful w?? t? identify tr?nd? in their early stages.R?ti?? ?r? ?l?? used b? l?nd?r? ?nd bu?in??? ?n?l??t? to d?t?rmin? a companys financial stability and ?t?nding. Its im??rt?nt to und?r?t?nd th?t fin?n?i?l r?ti?? ?r? tim? ??n?itiv?; th?? ??n only ?h?w a ?i?tur? of a business at a giv?n tim?. S? th? b??t w?? to u?? financial ratio s i? t? ??ndu?t a r?ti? analysis on a ??n?i?t?nt basis.Fin?n?i?l r?ti?? ?r? u??ful t??l? th?t h?l? ??m??ni?? ?nd investors ?n?l??? ?nd compare r?l?ti?n?hi?? b?tw??n different pieces of fin?n?i?l inf?rm?ti?n across ?n individu?l companys history, ?n industry, ?r ?n ?ntir? bu?in??? sector.Numbers t?k?n fr?m a companys income ?t?t?m?nt, b?l?n?? ?h??t, and cash fl?w statement ?ll?w ?n?l??t? t? ??l?ul?t? ??v?r?l t???? of fin?n?i?l r?ti?? f?r diff?r?nt kind? ?f bu?in??? intelligence ?nd inf?rm?ti?n. F?r r?ti?? to b? useful ?nd m??ningful, they must b?:C?l?ul?t?d u?ing r?li?bl?, ???ur?t? financial information (d??? your fin?n?i?l inf?rm?ti?n reflect ??ur tru? ???t picture?)C?l?ul?t?d ??n?i?t?ntl? from period to ??ri?dU??d in comparison to int?rn?l b?n?hm?rk? ?nd g??l?U??d in comparison t? other ??m??ni?? in ??ur indu?tr?Vi?w?d both ?t a ?ingl? ??int in tim? and as ?n indi??ti?n of broad tr?nd? ?nd i??u?? ?v?r tim?C?r?full? int?r?r?t?d in th? ?r???r ??nt?xt, ??n?id?ring th?r? are m?n? ?th?r im??rt?nt factors and indi??t?r? involved in ??????ing performance.FINANCIAL RATIOS CAN BE DIVIDED INTO FIVE CATEGORIES ACCORDING TO THE INFORMATION THEY PROVIDE1. Liquidit? or Solvency R?ti??A bu?in????? liquidity ?nd ??lv?n?? indi??t?s it? financial w?ll-b?ing, which ultim?t?l? measures th?t bu?in????? ?tr?ngths and sustainability.All ??m??ni?? are required to ??l?ul?t? their li?uidit? ?nd solvency fr?m tim? t? time, but especially wh?n d??l?ring a divid?nd, if a l??n is giv?n t? a director, ?h?r?h?ld?r ?r ?n int?rr?l?t?d entity, ?r in th? case of a merger.Th? Financial Advi??r? and Int?rm?di?r? Services A?t also r??uir?? that ?ll organisations, except th??? r?gi?t?r?d ?? a ??t?g?r? IV with th? Fin?n?i?l Services B??rd, conduct ?n annual ??????m?nt ?f its li?uidit? and solvency.“It is also g??d business ?r??ti?? f?r th? ?wn?r?, shareholders, directors ?r m?n?g?m?nt ?f ?n ?rg?ni??ti?n t? l??k at a ??m??n?’? li?uidit?, ???h flow ?nd current r?ti?? fr?m tim? t? tim? to d?t?rmin? the ‘g?n?r?l w?ll-b?ing’ ?f th? ?ntit?.It i? ????ibl? the first ?nd m??t ????nti?l ??????m?nt r??uir?d for making ??m? bu?in??? decisions â€" such ?? whether ?r n?t t? ?x??nd an ?nt?r?ri??, wh?th?r to inv??t ?x???? fund?, ?nd if funds ?r? needed fr?m external ??ur??? â€" for example.S?lv?n?? ?nd li?uidit? ?r? b?th t?rm? that r?f?r t? ?n enterprise’s state ?f fin?n?i?l h??lth, but with ??m? notable differences.Solvency r?f?r? t? ?n enterprises capacity t? m??t it? long-term financial ??mmitm?nt?.Li?uidit? r?f?r? t? ?n ?nt?r?ri??’? ?bilit? to ??? ?h?rt-t?rm ?blig?ti?n?; th? term ?l?? r?f?r? t? it? ????bilit? t? ??ll ????t? quickly to r?i?? cash.A ??lv?nt company is ?n? that ?wn? more th?n it ?w??; in other w?rd?, it h?? a ???itiv? n?t w?rth ?nd a manageable d?bt l??d.On the ?th?r h?nd, a company with ?d??u?t? liquidity m?? h?v? ?n?ugh cash ?v?il?bl? t? ??? it? bill?.S?lv?n?? and liquidity ?r? ??u?ll? important, ?nd h??lth? ??m??ni?? ?r? both solvent ?nd ??????? ?d??u?t? liqui dity.C?l?ul?ting S?lv?n??A k?? metric used to measure ?n ?nt?r?ri??’? ability to meet it? d?bt and other obligations i? th? S?lv?n?? R?ti? whi?h indicates wh?th?r a ??m??n?’? cash fl?w is sufficient to meet its ?h?rt-t?rm and l?ng-t?rm li?biliti??. The lower a ??m??n?? ??lv?n?? ratio, th? gr??t?r th? ?r?b?bilit? that it will d?f?ult ?n its d?bt ?blig?ti?n?,.The solvency r?ti? i? a comprehensive m???ur? ?f solvency, ?? it m???ur?? cash flow â€" r?th?r th?n n?t in??m? â€" b? including depreciation t? ?????? a ??m??n?’? capacity to ?t?? afloat. It m???ur?? thi? ???h flow ?????it? in r?l?ti?n t? ?ll liabilities, r?th?r th?n ?nl? debt.Apart from d?bt ?nd b?rr?wing?, ?th?r li?biliti?? in?lud? ?h?rt-t?rm ones ?u?h as ????unt? payable and l?ng-t?rm ones such ?? capital l???? ?nd ??n?i?n ?l?n ?blig?ti?n?.”M???uring ???h flow r?th?r th?n net income i? a better d?t?rmin?nt of ??lv?n??, especially f?r companies th?t in?ur l?rg? ?m?unt? ?f depreciation for th?ir ????t? but h?v? l?w level s ?f ??tu?l ?r?fit?bilit?.“Simil?rl?, assessing a company’s ?bilit? t? meet ?ll it? ?blig?ti?n? â€" r?th?r than d?bt ?l?n? â€" ?r?vid?? a m?r? ???ur?t? ?i?tur? of ??lv?n??. A company m?? h?v? a l?w d?bt ?m?unt, but if its cash m?n?g?m?nt ?r??ti??? ?r? ???r ?nd ????unt? ????bl? i? in?r???ing as a r??ult, it? solvency ???iti?n m?? not b? ?? solid ?? w?uld be indi??t?d b? m???ur?? that in?lud? only d?bt.”C?l?ul?ting LiquidityThe liquidity r?ti? ?f a company m???ur?? it? ?bilit? to pay its ?h?rt-t?rm debts. Th?r? ?r? thr?? common ??l?ul?ti?n? for li?uidit? ratios the ?urr?nt r?ti?, th? ??id r?ti?, ?nd th? ???h r?ti?.Th? ?urr?nt r?ti? indi??t?? a companys ability t? pay its current liabilities fr?m its ?urr?nt ????t?. Thi? is ?ft?n used t? ?ui?kl? m???ur? th? li?uidit? ?f a ??m??n?.Thi? method ??n?id?r? ?ll ?urr?nt ????t? ?nd current li?biliti??. Curr?nt assets are th??? ????t? th?t are ?x???t?d t? turn int? cash within one ???r or within the n?rm?l ???r?ting ???l? ?f the entity.E x?m?l?? of ?urr?nt assets are cash, ????unt? r???iv?bl?, ?nd ?r???id ?x??n???. Curr?nt liabilities are th??? d?bt? that ?r? ?x???t?d to be ??id or come du? within a ???r ?r in the n?rm?l operating ???l? ?f the ?ntit?â€" such ?? accounts payable and ???r?ll li?biliti??.”Th? ????nd r?ti? i? th? ??id ratio. Th? ?ur???? ?f thi? r?ti? is t? m???ur? h?w well a ??m??n? ??n meet it? ?h?rt-t?rm ?blig?ti?n? with it? most liquid ????t? th??? that ??n b? ?ui?kl? turn?d int? ???h.Th? fin?l r?ti? is th? ???h r?ti?, whi?h i? an indicator ?f a companys li?uidit? th?t further r?fin?? b?th th? ?urr?nt r?ti? and th? ?ui?k ratio by m???uring th? ?m?unt of ???h, ???h equivalents ?r inv??t?d fund? th?r? ?r? in ?urr?nt assets t? ??v?r ?urr?nt li?biliti??.2. Fin?n?i?l L?v?r?g? or D?bt RatiosFin?n?i?l l?v?r?g? r?ti?? ?r? ?l?? ??ll?d d?bt ratios. You m?? also find th?m ??ll?d long-term ??lv?n?? r?ti??.Th?? measure th? ability ?f th? bu?in??? t? m??t its long-term d?bt ?blig?ti?n?, ?u?h ?? int?r??t ???m?nt ? on d?bt, th? fin?l principal ???m?nt ?n d?bt, ?nd any ?th?r fixed ?blig?ti?n? like lease payments. L?ng-t?rm debt i? d?fin?d ?? ?blig?ti?n? t? r???? with a maturity of m?r? than ?n? year.Th??? r?ti?? ??m??r? th? overall debt l??d of a company to its ????t? or ??uit?, ?h?wing h?w much ?f th? company ????t? b?l?ng t? shareholders v?. creditors.If ?h?r?h?ld?r? own more ????t?, th? ??m??n? i? ??id t? be l??? l?v?r?g?d. If creditors ?wn a m?j?rit? ?f ????t?, th? company i? ??id to b? highl? l?v?r?g?d. Clearly, financial leverage r?ti?? h?l? m?n?g?m?nt and inv??t?r? to und?r?t?nd th? risk l?v?l ?f th? ???it?l ?tru?tur? of a company.L?t? look ?t a f?w of the m??t im??rt?nt ?n??.D?bt R?ti?Th? d?bt ratio m???ur?? a ??m??n?? t?t?l liabilities ?g?in?t it? t?t?l ????t? and is expressed ?? a ??r??nt?g?. It im?li?? the ??m??n?? ?bilit? to ??ti?f? it? li?biliti?? with it? ????t?, ?r h?w m?n? ????t? th? company mu?t ??ll t? pay ?ll it? liabilities. It shows th? companys ?v?r?ll d?bt burd?n.The d? bt ratio i? ??l?ul?t?d b? dividing t?t?l li?biliti?? b? t?t?l ????t?. B?th ?f th??? numb?r? can ???il? b? found on th? balance ?h??t.A lower r?ti?, .5% ?r l???, i? ???n ?? f?v?r?bl?, indi??ting ?t?bilit? and l?ng?vit?. A r?ti? ?f 1 m??n? th?t t?t?l liabilities ??u?l? t?t?l ????t?. In ?th?r words, the company w?uld h?v? t? ??ll ?ff all ?f it? assets in order t? ??? ?ff it? li?biliti??.D?bt t? Equity R?ti?Th? debt t? ??uit? ratio ??m??r?? a ??m??n?? total d?bt to t?t?l ??uit?, indi??ting th? percentage ?f company fin?n?ing that ??m?? fr?m ?r?dit?r? and inv??t?r?.A higher d?bt to ??uit? r?ti? indi??t?? th?t more creditor financing (b?nk l??n?) is used th?n investor financing (shareholders).Th? debt to equity r?ti? i? ??l?ul?t?d by dividing total li?biliti?? by t?t?l ??uit?. Th? d?bt t? ??uit? ratio i? considered a b?l?n?? sheet r?ti? because ?ll ?f th? elements are reported ?n th? b?l?n?? sheet. A d?bt t? ??uit? r?ti? of 1 w?uld m??n that investors ?nd creditors have ?n equal stake in th? bu?in??? assets. A l?w?r d?bt to ??uit? ratio u?u?ll? im?li?? a m?r? fin?n?i?ll? ?t?bl? business.E?uit? RatioTh? Equity r?ti? m???ur?? th? amount of ????t? that ?r? fin?n??d b? ?wn?r? investments by ??m??ring the total ??uit? in the ??m??n? t? th? total ????t?. In other w?rd?, ?ft?r all ?f the liabilities are ??id off, h?w mu?h ?f the remaining ????t? the inv??t?r? will ?nd up with.   Th? equity r?ti? ?l?? m???ur?? h?w mu?h ?f a firm? ????t? w?r? financed b? inv??t?r?, ?r the inv??t?r? ?t?k? in th? company.Th? ??uit? ratio i? calculated b? dividing t?t?l ??uit? b? total ????t?. All ?f the ????t? and ??uit? reported ?n th? b?l?n?? ?h??t ?r? in?lud?d in th? ??uit? ratio calculation. A high?r ??uit? r?ti? i? seen as f?v?r?bl? because it ?h?w? that inv??t?r? h?v? confidence and ?r? willing t? b??k thi? company ?nd th?t th? ??m??n? i? m?r? ?u?t?in?bl? ?nd less ri?k?.Th??? fin?n?i?l leverage r?ti?? ?ll?w th? ?wn?r ?f th? bu?in??? t? d?t?rmin? how w?ll the business can meet it? l?ng-t? rm d?bt ?blig?ti?n?. Th??? ratios ?r? w?rth nothing, ?r very little, in i??l?ti?n. Y?u h?v? t? be ?bl? t? d? tr?nd and indu?tr? analysis to b? able t? d?t?rmin? how w?ll ??u ?r? m?n?ging ??ur d?bt ???iti?n.Th? financial l?v?r?g? ?r d?bt r?ti?? f??u? ?n a firm? ability to m??t it? l?ng-t?rm d?bt ?blig?ti?n?.It looks at th? firm? l?ng term li?biliti?? on th? balance sheet such as b?nd?.Th? most ??mm?n fin?n?i?l l?v?r?g? r?ti?? are th? t?t?l d?bt r?ti??, the d?bt/??uit? r?ti?, th? l?ng-t?rm d?bt r?ti?, th? tim?? int?r??t earned ratio, th? fix?d ?h?rg? coverage ratio, and the ???h ??v?r?g? r?ti?.Alth?ugh ?ll ?lightl? diff?r?nt, these fin?n?i?l leverage ratios ?ll t?ll ??u about different ?????t? ?f th? ??m??n?? overall fin?n?i?l h??lth ?nd, in m??t in?t?n???, quantify ?h?r?h?ld?r equity.3. A???t Effi?i?n?? ?r Turn?v?r R?ti??Th? ????t turnover r?ti?, ?l?? known ?? the total ????t turn?v?r r?ti?, m???ur?? th? ?ffi?i?n?? with whi?h a ??m??n? u??? it? ????t? to generate ??l??. Th? ????t tur nover ratio f?rmul? is ??u?l to net ??l?? divid?d by the t?t?l or ?v?r?g? ????t? ?f a ??m??n?.A ??m??n? with a high ????t turn?v?r ratio operates more efficiently compared t? ??m??tit?r? with l?w?r ratios.A???t Turn?v?r R?ti? F?rmul?Th? f?rmul? for the r?ti? i? as follows: Wh?r?:N?t ??l?? ?r? the ?m?unt ?f r?v?nu? g?n?r?t?d after deducting sales r?turn?, sales discounts, ?nd sales ?ll?w?n???.Average t?t?l assets ?r? th? ?v?r?g? of ?ggr?g?t? ????t? at the ?nd ?f th? current year and preceding ???r. N?t?: ?n ?n?l??t may u?? ?ith?r ?v?r?g? or ?nd-?f-??ri?d assets.Example ?f A???t Turnover RatioC?m??n? A r???rt?d beginning t?t?l ????t? ?f $199,500 ?nd ending t?t?l ????t? ?f $199,203. Ov?r the same ??ri?d, th? company g?n?r?t?d ??l?? of $325,300 with ??l?? returns ?f $15,000.Th? ????t turn?v?r r?ti? f?r C?m??n? A i? calculated ?? follows: Th?r?f?r?, for ?v?r? dollar in t?t?l ????t?, C?m??n? A g?n?r?t?d $1.5565 in ??l??.C?m??ri??n? ?f A???t Turnover R?ti??Consider f?ur hypothetical companies: C?m??n? A, C?m??n? B, C?m??n? C, and C?m??n? D. C?m??ni?? A and B ???r?t? in the f??t-f??d indu?tr?, while ??m??ni?? C ?nd D ???r?t? in th? t?l???mmuni??ti?n? indu?tr?:F??t f??dT?l???mmuni??ti?n?(In dollars)Company ACompany BC?m??n? CC?m??n? DBeginning A???t?$54,341$250,000$75,340$132,434Ending A???t?$55,421$252,000$77,506$134,545Av?r?g? T?t?l A???t?$54,881$251,000$76,423$133,490Net ??l??$43,141$212,134$54,231$75,654Asset Turnover Ratio0.790.850.710.57Th? ????t turnover r?ti? f?r ???h company i? ??l?ul?t?d as net ??l?? divid?d by ?v?r?g? t?t?l assets.A???t ratio ??m??ri??n? across markedly diff?r?nt industries do n?t provide a g??d in?ight into h?w w?ll a ??m??n? i? doing. For ?x?m?l?, it w?uld b? in??rr??t to ??m??r? th? ????t turn?v?r ratio ?f C?m??n? A t? that ?f Company C, ?? th?? operate in different industries.It i? ?nl? ??? r??ri?t? t? ??m??r? th? ????t turnover r?ti? ?f ??m??ni?? ???r?ting in the ??m? industry. In ?u?h ?????, w? can ??? th?t Company B operates more efficiently th?n C?m??n? A.Thi? m?? indicate th?t C?m??n? A i? ?x??ri?n?ing ???r sales ?r that it? fix?d assets ?r? not being utiliz?d t? th?ir full ?????it?.Interpretation ?f the Asset Turnover RatioTh? asset turn?v?r r?ti? m???ur?? how ?ffi?i?ntl? a ??m??n? is u?ing assets t? generate ??l??.Therefore, a high?r r?ti? is f?v?r?bl?, ?? it indi??t?? a more efficient use ?f ????t?.Conversely, a l?w?r r?ti? indicates that th? ??m??n? i? n?t using assets ?? ?ffi?i?ntl? ?? it might. Thi? can be due t? excess production capacity, ???r ??ll??ti?n m?th?d?, ?r ???r inv?nt?r? m?n?g?m?nt.It is im??rt?nt t? ??m??r? the r?ti?? b?tw??n ??m??ni?? operating in th? ??m? indu?tr?, as th? b?n?hm?rk ????t turnover r?ti? v?ri?? gr??tl? depending on the indu?tr?.Industries with a l?w ?r?fit margin t?nd t? g?n?r?t? a high?r r?ti? ?nd ???it?l-int?n?iv? indu?tri?? t ?nd to r???rt a lower r?ti?.Key T?k??w???Th? asset turnover ratio i? ?n ?ffi?i?n?? r?ti? th?t measures h?w ?ffi?i?ntl? a company is u?ing its ????t? to g?n?r?t? sales.C?m??ring th? ????t turn?v?r r?ti?? ?f companies in diff?r?nt industries is n?t ???r??ri?t?, ?? industries vary in ???it?l int?n?iv?n???.A higher ratio, b?tw??n companies in th? same indu?tr?, i? generally ?lw??? f?v?r?bl?, as it indi??t?? ?n efficient u?? of ????t?.A l?w?r ratio, comparing ??m??ni?? in the ??m? indu?tr?, indi??t?? ???r ?ffi?i?n??, which may b? du? t? ???r utiliz?ti?n ?f fix?d assets, poor collection m?th?d?, ?r poor inv?nt?r? m?n?g?m?nt.Th? ????t efficiency ?r turn?v?r ratios m???ur? the ?ffi?i?n?? with whi?h th? firm uses it? assets t? ?r?du?? ??l??. A? a r??ult, it f??u??? ?n both th? income ?t?t?m?nt (??l??) and th? b?l?n?? sheet (assets).Th? m??t common ????t ?ffi?i?n?? ratios ?r? the inventory turnover r?ti?, th? r???iv?bl?? turnover ratio, th? days ??l?? in inventory r?ti?, the days ??l?? in rec eivables r?ti?, the n?t w?rking capital r?ti?, the fix?d ????t turn?v?r r?ti?, ?nd th? t?t?l ????t turnover r?ti?.Th? ????t ?ffi?i?n?? r?ti?? are ??rti?ul?rl? v?lu?bl? in describing the bu?in??? fr?m a d?n?mi? vi?w??int. U??d t?g?th?r, th?? d???rib? how well th? business i? b?ing run h?w fast it? ?r?du?t? ?r? selling, how l?ng customers t?k? to pay and h?w mu?h ???it?l i? ti?d u? in inv?nt?r?.4. Profitability R?ti??Th? profitability r?ti?? ?r? ju?t wh?t th? name im?li??. Th?? f??u? ?n th? firm? ?bilit? to g?n?r?t? a ?r?fit ?nd ?n ?d??u?t? r?turn ?n assets ?nd equity.Th?? measure how ?ffi?i?ntl? th? firm u??? it? ????t? ?nd how ?ff??tiv?l? it manages its ???r?ti?n? ?nd ?n?w?r ?u?h b??i? questions as H?w ?r?fit?bl? i? this bu?in???? ?nd How d??? it m???ur? u? t? its ??m??tit?r??Pr?fit?bilit? r?ti?? ?r? a set of m???ur?m?nt? used to d?t?rmin? the ?bilit? ?f a bu?in??? t? create ??rning?. Th??? r?ti?? are ??n?id?r?d t? b? favorable wh?n they im?r?v? over a trend lin? ?r ?r? comparative ly better th?n the results of ??m??tit?r?.Pr?fit?bilit? ratios are d?riv?d from a comparison ?f r?v?nu?? t? diff?r?n?? gr?u?ing? ?f ?x??n??? within the in??m? statement.The m?in ratios are as follows:Contribution m?rgin r?ti?: Subtracts all v?ri?bl? ?x??n??? in th? in??m? statement fr?m ??l??, and th?n divid?? the r??ult b? sales. Thi? i? u??d to d?t?rmin? th? ?r???rti?n of ??l?? still available after all v?ri?bl? ???t? t? pay f?r fixed ???t? ?nd g?n?r?t? a ?r?fit. Thi? i? u??d for breakeven ?n?l??i?.Gr??? profit r?ti?: Subtr??t? ?ll ???t? r?l?t?d t? th? ???t of g??d? ??ld in the in??m? statement from ??l??, ?nd th?n divid?? th? r??ult by sales. Thi? i? u??d to determine th? ?r???rti?n ?f sales ?till ?v?il?bl? ?ft?r g??d? and services h?v? b??n ??ld t? ??? f?r ??lling ?nd ?dmini?tr?tiv? ???t? ?nd g?n?r?t? a ?r?fit. This r?ti? in?lud?? th? allocation ?f fix?d costs to th? cost ?f g??d? sold, ?? th?t the r??ult tends t? yield a ?m?ll?r ??r??nt?g? th?n the contribution m?rgin r?ti?.N?t profit r?ti?: Subtr??t? all ?x??n??? in the in??m? ?t?t?m?nt fr?m ??l??, and then divid?? th? result by sales. This i? u??d t? d?t?rmin? the net amount ?f ??rning? g?n?r?t?d in a reporting ??ri?d, net of in??m? t?x??. If th? ???ru?l basis ?f ????unting is u??d, thi? ??n r??ult in a figur? th?t is diff?r?nt fr?m wh?t ???h fl?w? would indicate, du? t? the ???ru?l ?f expenses th?t h?v? n?t ??t ???urr?d.A different ?l??? ?f profitability ratios ??m??r? th? results listed on th? income ?t?t?m?nt to th? inf?rm?ti?n ?n th? b?l?n?? ?h??t.The int?nt ?f these m???ur?m?nt? i? t? examine the efficiency with which m?n?g?m?nt ??n ?r?du?? profits, in ??m??ri??n t? th? amount of ??uit? or ????t? ?t th?ir disposal. If th? outcome ?f th??? m???ur?m?nt? i? high, it im?li?? th?t r???ur?? usage h?? b??n minimiz?d.Th? main ratios in thi? ??t?g?r? ?r?:R?turn ?n assets: Divides n?t ?r?fit? by th? t?t?l ?m?unt ?f ????t? on th? balance sheet. The m???ur?m?nt can be im?r?v?d b? u?ing a tight ?r?dit policy to r?du?? th? amount of accounts receivable, a ju?t-in-tim? ?r?du?ti?n ???t?m to r?du?? inv?nt?r?, ?nd b? selling ?ff fix?d ????t? th?t are r?r?l? u??d. Th? r??ult varies by indu?tr?, ?in?? ??m? indu?tri?? r??uir? f?r m?r? ????t? th?n ?th?r?.R?turn on ??uit?: Divid?? n?t ?r?fit? b? th? t?t?l ?m?unt ?f equity ?n the b?l?n?? ?h??t. Th? m???ur?m?nt can b? im?r?v?d b? funding a larger ?h?r? ?f ???r?ti?n? with d?bt, ?nd b? u?ing d?bt t? buy b??k shares, th?r?b? minimizing th? use of ??uit?. D?ing so can b? risky, if a bu?in??? d??? not experience ?uffi?i?ntl? ??n?i?t?nt ???h flows t? pay off th? d?bt.Wh?n u?ing profitability r?ti??, it i? b??t to ??m??r? a ??m??n?? r??ult? f?r the ?urr?nt ??ri?d to the r??ult? for th? ??m? ??ri?d in th? ?r???ding year. Th? r????n i? th?t m?n? ?rg?niz?ti?n? have ?????n?l sales, which ??u??? th?ir profitability r?ti?? t? vary considerably ?v?r th? ??ur?? ?f a ???r.5. M?rk?t V?lu? R?ti??Th? market v?lu? r?ti?? can b? calculated f?r ?ubli?l? traded ??m??ni?? ? nl? ?? they relate t? ?t??k ?ri??. M?rk?t value r?ti?? help ?v?lu?t? the economic status of ?ubli?l? tr?d?d ??m??ni?? and ??n ?l?? a role in identifying ?t??k? th?t m?? b? ?v?rv?lu?d, und?rv?lu?d, ?r priced f?irl?.Alth?ugh a wid? variety ?f m?rk?t value r?ti?? ?r? in use, the m??t popular in?lud? ??rning? ??r ?h?r?, book value ??r share, ?nd th? ?ri??-??rning? r?ti?. Oth?r? include the price/cash r?ti?, divid?nd ?i?ld ratio, m?rk?t v?lu? per share, ?nd th? market/book r?ti?.E??h of th??? m???ur?? i? u??d in a different way, but when combined, th?? ?ff?r a ?r?tt? ???ur?t? fin?n?i?l ??rtr?it of ?ubli?l? traded companies. In addition, m?rk?t value ratios can h?l? giv? m?n?g?m?nt ?n id?? ?f what a firms investors think of it? performance and futur? ?r?????t?.Th??r? ?l?? u??d to analyze ?t??k trends, ?lth?ugh ??m? ??nt?xt i? necessary. F?r example, a companys l?w ?ri??-??rning? r?ti? m?? indicate th? stock i? ?n und?rv?lu?d b?rg?in in a ?t?bl? indu?tr?, but it ?l?? ??uld indi??t? th? com panys ??rning? prospects ?r? r?l?tiv?l? un??rt?in, and th? ?t??k m?? be a ri?k? b?t.Th?t? wh? you ?lw??? ?h?uld consider v?ri?u? f??t?r?, including a r?ng? ?f m?rk?t value r?ti??, when m?king a d??i?i?n ?b?ut an inv??tm?nt. A ?t??k with one gr??t-l??king m???ur? could b? ?n undiscovered g?m, or it ??uld b? a dud th?t? under-priced f?r a reason.E?rning? P?r Sh?r?E?rning? ??r ?h?r? m???ur?? a companys n?t in??m? per ?h?r? ?f ?ut?t?nding stock, indi??ting a ??m??n?? ?r?fit?bilit? to inv??t?r?.Calculate earnings per ?h?r? b? dividing th? ??m??n?? n?t income by th? number ?f ?ut?t?nding shares (stock ?urr?ntl? h?ld by ?ll shareholders).F?r example, if a ??m??n? h?? $10 milli?n in net in??m? ?nd 4 milli?n ?ut?t?nding ?h?r??, th? earnings per ?h?r? w?uld be $10 million divid?d by 4 milli?n, whi?h is $2.50.Book V?lu? Per ShareTh? book v?lu? is a ??m??n?? equity th?t does not in?lud? ?r?f?rr?d stock divid?d b? the ?h?r?? ?ut?t?nding in the m?rk?t.F?r ?x?m?l?, if a companys t?t?l assets equal $15 milli?n ?nd it? t?t?l liabilities ??u?l $5 million, th? t?t?l equity would b? $10 milli?n. If the ??m??n? h?? $2 milli?n in preferred ?t??k, d?du?t th?t t? get $8 milli?n, th? ?m?unt ?v?il?bl? t? common shareholders. If th?r? are 1 million ?ut?t?nding ?h?r??, the b??k v?lu? ??r ?h?r? would be $8, or $8 million divided b? 1 milli?n.M?rk?t V?lu? Per Sh?r?Market v?lu? ??r ?h?r? i? the m?rk?t v?lu? ?f a ??m??n? divid?d by th? t?t?l numb?r ?f ?ut?t?nding ?h?r??. Thi? ?uit? ?im?l? i? the g?ing r?t? f?r a ?h?r? ?f common ?t??k.The m?rk?t v?lu? ?f th? ??m??n? can b? determined by multi?l?ing th? ?ri?? ?f it? ??mm?n ?t??k b? th? numb?r of ?ut?t?nding shares.Market/Book (M/B) RatioWith the m?rk?t/b??k r?ti?, ?n?l??t? ??n ??m??r? a companys market v?lu? to it? b??k v?lu?, Th? r?ti? can be ??l?ul?t?d b? dividing th? market v?lu? ??r ?h?r? by th? b??k value ??r ?h?r?.For example, if a ??m??n? has a b??k v?lu? ??r ?h?r? ?f $8 ?nd th? ?t??k ?urr?ntl? i? v?lu?d at $10 ??r ?h?r?, th? M/B r?ti? w?uld b? calculated b? dividing $10 (?t??k price) b? $8 (b??k v?lu? per ?h?r?).Thi? would give ??u a r?ti? ?f 1.25. In other words, th? m?rk?t v?lu? of a ?h?r? of ?t??k i? 25 ??r??nt gr??t?r th?n its b??k v?lu?. A r?ti? ?f l??? than 1 ??n m??n a ?t??k might b? undervalued, whil? a r?ti? gr??t?r th?n 1 might mean it i? ?v?rv?lu?d.Pri??-E?rning? (P/E) R?ti?The ?ri??-??rning? ratio i? th? ?urr?nt ?ri?? ?f th? stock divid?d b? th? earnings ??r ?h?r?. E?rning? g?n?r?ll? are calculated b? looking ?t th? last four ?u?rt?r? ?f fin?n?i?l r??ult?.F?r ?x?m?l?, if a ?t??k i? tr?ding ?t $25 per share ?nd their ??rning? ??r share i? $2.50, the P/E ratio w?uld b? $25 divided by $2.50, whi?h ??u?l? a ratio of 10-t?-1.An?l??t? also m?? talk ?b?ut a f?rw?rd P/E r?ti?, which i? the ??tim?t?d P/E r?ti? f?r th? n?xt four quarters.Pri??/C??h RatioThe ?ri??/???h r?ti? ??m??r?? th? price of a companys stock to it? cash flow.To ??l?ul?t? this r?ti?, simply divid? th? m?rk?t v?lu? of a ?h?r? b? the ?m?unt ?f ???h fl?w ??r ?h?r?. Cash fl?w per share i? the ?m?unt ?f ???h a company has on h?nd ?ft?r t?king depreciation into ????unt.For example, if th? ?ri?? of a ??m??n?? ?t??k is $20 per ?h?r? ?nd th? ??m??n? has cash flow ?f $10 ??r ?h?r?, the ?ri??/???h r?ti? w?uld be $20 divid?d b? $10, whi?h ??u?l? 2. T??i??ll?, a lower numb?r h?r? is b?tt?r because th?t means gr??t?r cash fl?w.Divid?nd Yield R?ti?An?l??t? arrive at th? divid?nd ?i?ld ratio b? dividing the t?t?l dividend payments paid per ???r b? the m?rk?t ?ri?? ?f th? stock.For ?x?m?l?, if a ??m??n? pays out divid?nd? ?u?rt?rl? in th? ?m?unt? ?f $2.25, $2.50, $2.50, ?nd $2.75, th? t?t?l divid?nd ???m?nt? f?r th? ???r would be $10. If the price of th? stock i? $100, ??u w?uld divid? $10 (dividend payments) by $100 (?t??k price).The ?n?w?r i? 0.10, ?r 10 ??r??nt.Kn?wing thi? ratio h?l?? you to b?tt?r und?r?t?nd th? return on your inv??tm?nt ??u ??n r??li?ti??ll? ?x???t.Who ?r? the u??r? of financial r?ti???Financial ratio ?n?l??i? is aimed t? ?????? th? fin?n?i?l ??rf?rm?n?? ?nd d?t?rmin? th? fin?n?i?l ???iti?n ?f ?n organization thr?ugh it? profitability, liquidity, ??tivit?, l?v?r?g? and ?th?r relevant indi??t?r?.Th?r? ?r? many groups and individuals with diverse and conflicting interests but w?nt t? kn?w ?b?ut th? bu?in??? ??rf?rm?n?? ?r position. In the following t?bl? major u??r? ?f financial ?t?t?m?nt? with th?ir areas ?f interest ?r? d???rib?d.Bankers ?nd L?nd?r?: Use ?r?fit?bilit?, li?uidit? and investment b???u?? they want t? know the ability ?f the b?rr?wing business in r?gul?r ??h?dul?d int?r??t ???m?nt? and r????m?nt? ?f ?rin?i??l loan ?m?unt.Investors: U?? profitability and investment b???u?? they are m?r? interested in ?r?fit?bilit? ??rf?rm?n?? ?f bu?in??? ?nd safety ???urit? ?f their investment ?nd growth potential of th?ir investment.G?v?rnm?nt: Use profitability b???u?? government m?? u?? ?r?fit ?? a b??i? for t?x?ti?n, gr?nt? and ?ub?idi??.Employees: Use profitability, li?uidit? ?nd activity b???u?? ?m?l????? will b? ??n??rn?d with j?b security, b?nu? ?nd ??ntinu?n?? of bu?in??? ?nd w?g? b?rg?ining.Customers: U?? li?uidit? because customers will seek reassurance that the bu?in??? can ?urviv? in the short t?rm and continue to ?u??l?.Su??li?r?: U?? li?uidit? because suppliers ?r? m?r? interested in knowing the ?bilit? ?f th? bu?in??? t? settle its short-term obligations ?? and wh?n they ?r? due.M?n?g?m?nt: Use ?ll r?ti?? because m?n?g?m?nt is int?r??t?d in ?ll ?????t? i.?., b?th fin?n?i?l performance and fin?n?i?l ??nditi?n of the bu?in???.Suppliers: Suppliers will want t? kn?w if their customers ??n ?ff?rd t? ??? their bill?. Th?? will l??k ?t th? ???h in th? business. Liquidity R?ti?? th?t ?n?l??? li?uidit? will help. Examples of th??? in?lud? the ?urr?nt r?ti? and quick r?ti?.Own?r?: Own?r? ?f th? bu?in??? m?? want t? review how sales ?r? performing, ?? th? r?turn ?n ??l?? ratio m?? b? im??rt?nt. Th?? will want to check ?r?fit?bilit? r?ti??. How g??d ?r? th? gross ?r?f it margins ?nd n?t ?r?fit m?rgin??Of course cash fl?w i? ?xtr?m?l? im??rt?nt ?? a k?? area ?f f??u? will b? ?n th? w?rking ???it?l ratios. Th??? m?? in?lud? th? trade accounts receivable ratio, tr?d? accounts ????bl? r?ti? ?nd inv?nt?r? turn?v?r ratio.M?n?g?r?/Dir??t?r?: Int?rn?l u??r? ?f ????unting inf?rm?ti?n will ?f ??ur?? in?lud? key m?n?g?r? ?nd dir??t?r? in th? bu?in???. Th?? m?? n??d th?ir own d???rtm?nt/divi?i?n inf?rm?ti?n. Thi? mix f?r example may inv?lv? ?r?fit?bilit? r?ti??, ??l?? r?ti??, earnings ratios, d?bt/??uit? ratios, cash ??ll??ti?n ??ri?d?, ????unt? ????bl? d???.LIMITATIONS OF RATIO ANALYSISR?ti? ?n?l??i?, with?ut a d?ubt, i? ?m?ng?t th? m??t powerful t??l? for fin?n?i?l ?n?l??i?.An? inv??t?r, who w?nt? to be m?r? ?ffi?i?nt at th?ir j?b, mu?t d?v?t? more tim? towards und?r?t?nding r?ti?? ?nd ratio ?n?l??i?.H?w?v?r, thi? does not m??n th?t it is fr?? ?f limit?ti?n?. Like all techniques, fin?n?i?l r?ti?? h?v? th?ir limit?ti?n? t??.R?ti? analysis i? treated as a kn ife. If a knife i? u??d by a d??t?r, h?/?h? ??n ??v? th? lif? ?f hum?n beings during the operation. At th? ??m? tim?, a knife is u??d b? a kitchen master, he/she ??n cut th? fruit? and v?g?t?bl?? f?r early ??m?l?ti?n ?f th? f??d ?r???r?ti?n.Lik?wi??, a knife i? u??d b? ?ul?rit, he/she can put ?n ?nd t? lif? ?f human b?ing.H?n??, it i? n?ti??d th?t und?ubt?dl?, r?ti? ?n?l??i? i? a tool ?v?il?bl? in th? hands of ?n?l??t ?nd th? ?ignifi??n?? ?f ratio ?n?l??i? i? b???d ?n it? u??g?.“The ratio ?n?l??i? i? ?n ?id t? m?n?g?m?nt in t?king ?r?dit decisions but ?? a mechanical ?ub?titut? f?r thinking ?nd judg?m?nt, it is w?r?? than u??l???”. Hunt, Willi?m? ?nd DonaldsonR?ti? analysis ?uff?r? fr?m ??rt?in limitations ?v?n th?ugh th?? are ???il? calculated ?nd und?r?t??d. Such limitations are given b?l?w.Misleading Fin?n?i?l St?t?m?nt?The fir?t and foremost thr??t t? r?ti? analysis i? d?lib?r?t? mi?l??ding ?t?t?m?nt? i??u?d by the m?n?g?m?nt.The m?n?g?m?nt ?f most ??m??ni?? i? aware that in v??t?r? l??k at certain numb?r? lik? sales, earnings, ???h fl?w etc very ??ri?u?l?. Oth?r numb?r? on th? fin?n?i?l ?t?t?m?nt? d? not g?t ?u?h ?tt?nti?n. They th?r?f?r? m?ni?ul?t? th? numb?r? within the l?g?l framework t? m?k? im??rt?nt m?tri?? l??k g??d.Thi? i? a common ?r??ti?? ?m?ng?t publically li?t?d ??m??ni?? ?nd is called “Wind?w Dr???ing”. Investors need t? b? ?w?r? ?f such window dr???ing ?nd mu?t be careful in calculating and int?r?r?ting r?ti?? b???d ?n th??? numb?r?.In??m??r?bilit?C?m??ri??n i? th? ?rux ?f ratio analysis. On?? ratios h?v? b??n calculated, th?? n??d t? b? ??m??r?d with ?th?r ??m??ni?? ?r over tim?.However, many tim?? ??m??ni?? h?v? accounting ??li?i?? th?t d? n?t m?t?h with ???h ?th?r.Thi? m?k?? it im????ibl? t? have ?n? m??ningful r?ti? ?n?l??i?. R?gul?t?r? ?ll ?v?r th? w?rld ?r? ?triving t? make fin?n?i?l ?t?t?m?nt? ?t?nd?rdiz?d.H?w?v?r in m?n? ?????, ??m??ni?? can ?till ?h???? ????unting ??li?i?? whi?h will make th?ir statements incomparable.Qualita tive FactorsC?m??ri??n ?v?r time is ?n?th?r im??rt?nt t??hni?u? used in r?ti? analysis. It i? ??ll?d horizontal analysis. H?w?v?r, m?n? tim?? comparison ?v?r tim? i? m??ningl??? b???u?? of inflation.Tw? ??m??ni?? m?? b? u?ing th? ??m? m??hin? with th? ??m? ?ffi?i?n?? but one will h?v? a b?tt?r r?ti? because it b?ught th? m??hin? earlier at a l?w ?ri??.Al??, ?in?? the m??hin? w?? ?ur?h???d earlier, it may b? ?l???r to impairment. But th? ratio d??? n?t r?fl??t thi?.Subj??tiv? Int?r?r?t?ti?nFin?n?i?l r?ti?? ?r? established “thumb of rul??” ?b?ut the w?? a business should operate.H?w?v?r ??m? ?f th??? rul?? ?f thumb have b???m? obsolete. Th?r?f?r? when ??m??ni?? come with a n?w kind ?f bu?in??? m?d?l, r?ti?? ?h?w th?t th? ??m??n? i? n?t a g??d inv??tm?nt. In reality th? company i? ju?t “un??nv?nti?n?l”.M?n? may ?v?n ??ll these ??m??ni?? inn?v?tiv?. R?ti? ?n?l??i? of ?u?h ??m??ni?? does not ?r?vid? m??ningful inf?rm?ti?n. Inv??t?r? must l??k furth?r to make their decisions.F?l?? R??ult? if B???d on In??rr??t A???unting DataA???unting r?ti?? ??n b? ??rr??t only if th? d?t? (?n which th?? ?r? based) ?r? ??rr??t. S?m?tim??, the inf?rm?ti?n given in th? financial ?t?t?m?nt? i? affected b? wind?w dr???ing, i.?., showing ???iti?n b?tt?r than what actually is.F?r ?x?m?l?, if inv?nt?r? v?lu?? ?r? infl?t?d ?r depreciation i? n?t ?h?rg?d ?n fix?d assets, not only will ?n? have an ??timi?ti? vi?w ?f profitability ?f the ??n??rn but ?l?? of its fin?n?i?l ???iti?n.S? th? ?n?l??t mu?t ?lw??? b? ?n th? l??k-?ut for ?ign? ?f wind?w dressing if any.No Idea ?f Pr?b?bl? Happenings in FutureR?ti?? are ?n attempt t? make ?n analysis ?f the ???t fin?n?i?l ?t?t?m?nt?; so they are hi?t?ri??l d??um?nt?.Now-a-days keeping in vi?w th? ??m?l?xiti?? ?f the business, it i? im??rt?nt t? h?v? an id?? ?f the ?r?b?bl? happenings in future.Variation in A???unting M?th?d?The tw? firms’ r??ult? ?r? comparable with the h?l? of ????unting ratios ?nl? if th?? f?ll?w the same accounting methods or b????. C?m??ri??n will b???m? difficult if th? tw? ??n??rn? f?ll?w the different m?th?d? of providing d??r??i?ti?n or valuing ?t??k.Simil?rl?, if th? tw? firm? ?r? f?ll?wing tw? diff?r?nt ?t?nd?rd? and m?th?d?, ?n ?n?l??i? by r?f?r?n?? t? th? r?ti?? w?uld b? mi?l??ding. M?r??v?r, utilisation ?f inbuilt f??iliti??, ?v?il?bilit? ?f f??iliti?? ?nd ???l? of ???r?ti?n would affect fin?n?i?l ?t?t?m?nt? ?f diff?r?nt firm?.C?m??ri??n ?f fin?n?i?l ?t?t?m?nt? ?f ?u?h firm? by m??n? of r?ti?? i? b?und to be misleading.Price Level ChangesChanges in ?ri?? l?v?l? make comparison f?r v?ri?u? ???r? diffi?ult. F?r ?x?m?l?, the r?ti? ?f ??l?? to t?t?l ????t? in 1996 w?uld be mu?h higher than in 1982 due t? rising ?ri???, fix?d ????t? being ?h?wn ?t ???t ?nd n?t ?t market ?ri??.Only On? Method ?f An?l??i?R?ti? analysis i? only a b?ginning and giv?? just a fr??ti?n ?f inf?rm?ti?n needed f?r d??i?i?n-m?king. So, t? h?v? a ??m?r?h?n?iv? analysis ?f financial ?t?t?m?nt?, ratios should be u??d along wi th ?th?r methods of analysis.No C?mm?n St?nd?rd?It i? very diffi?ult to lay d?wn a ??mm?n ?t?nd?rd f?r comparison b???u?? ?ir?um?t?n??? differ fr?m concern to concern and the n?tur? ?f each indu?tr? is diff?r?nt. F?r ?x?m?l?, a bu?in??? with current ratio ?f m?r? th?n 2:1 might not be in a ???iti?n to pay ?urr?nt li?biliti?? in tim? b???u?? of ?n unfavorable di?tributi?n of ?urr?nt ????t? in r?l?ti?n t? li?uidit?.On th? other hand, another bu?in??? with a ?urr?nt r?ti? of ?v?n less than 2 : 1 might n?t be ?x??ri?n?ing any difficulty in m?king the ???m?nt of ?urr?nt li?biliti?? in time b???u?? ?f its favourable distribution ?f current assets in r?l?ti?n t? li?uidit?.Diff?r?nt M??ning? A??ign?d to the Same T?rmDiff?r?nt firms, in ?rd?r to calculate r?ti? m?? assign different m??ning?. F?r ?x?m?l?, profit for the ?ur???? of calculating a r?ti? may be t?k?n ?? profit b?f?r? ?h?rging int?r??t ?nd tax or profit b?f?r? t?x but ?ft?r interest ?r profit ?ft?r tax ?nd interest.Thi? m?? affect th? ??l?ul?ti?n ?f ratio in diff?r?nt firm? ?nd such r?ti? wh?n u??d f?r ??m??ri??n may l??d t? wrong conclusions.Ignores Qu?lit?tiv? F??t?r?A???unting r?ti?? ?r? t??l? ?f ?u?ntit?tiv? ?n?l??i? ?nl?. But ??m?tim?? qualitative factors may ?urm?unt the quantitative aspects. Th? calculations d?riv?d fr?m th? ratio ?n?l??i? und?r such ?ir?um?t?n??? may get distorted.F?r ?x?m?l?, th?ugh ?r?dit m?? b? granted to a ?u?t?m?r ?n th? basis of information r?g?rding hi? fin?n?i?l position, ??t th? grant ?f ?r?dit ultim?t?l? d???nd? ?n d?bt?r’? ?h?r??t?r, h?n??t?, ???t r???rd and his managerial ?bilit?.No u?? if R?ti?? ?r? worked ?ut f?rm In?ignifi??nt ?nd Unr?l?t?d FiguresA???unting ratios m?? b? w?rk?d f?r ?n? tw? in?ignifi??nt ?nd unr?l?t?d figures as ratio of sales and inv??tm?nt in g?v?rnm?nt securities. Such ratios may b? misleading. Ratios should b? calculated ?n th? b??i? ?f ??u?? ?nd effect r?l?ti?n?hi?.One ?h?uld be ?l??r ?? t? wh?t ??u?? i? and wh?t ?ff??t i? b?f?r? ??l?ul?ting a r ?ti? b?tw??n two figures.