The numbers available on the financial statements of a company-Income statement, balance sheet, and cash flow statement are used for performing the quantitative analysis and assesses the liquidity, growth, leverage, profitability, margins, valuation, rates of return, and a lot more.
Financial analysts use them for comparing the strengths and weakness of different companies. Funders use financial ratios for measuring the results against other industries or making judgements regarding managerial effectiveness. We, at BookMyEssay have recruited the best financial experts who can offer in-depth explanation and also provide assignment help with Liquidity ratio topics.
Kinds of Financial Ratios
Financial Ratios are classified as per the information they offer. The Financial Ratios that are used frequently are highlighted in our Financial Ratios assignment help firm as follows:
Profitability Ratios: These ratios provide different measures for the success of firms to generate profits using their assets and control their expenses. The commonly used profitability ratios are Gross Profit Margin, Return on Equity, Return on Assets, etc.
Liquidity Ratios: These ratios offer information regarding the ability of a firm to meet the short-term financial obligations. These are of interest who extends short-term credit to firms. Thee commonly used liquidity ratios are current ratio, cash ratio, and quick ratio.
Activity Ratios: These ratios indicate how efficiently a firm uses its assets. These ratios are at times referred to as asset utilization ratios, efficiency ratios, or asset management ratios. The commonly used ratios are Receivables turnover, Inventory Turnover, Average Collection Period, and Assets Turnover.
Debt Ratios: Debt ratios offer an indication regarding the long-term solvency of a firm. Unlike the liquidity ratios, which are related to short-term assets and liabilities, these ratios measure the extent to which firms are using long-term debts.
Debt Ratio= Total Debt/ Total Assets
Market Ratios: These ratios measure the response of investors to own the stock of a company. They are concerned with return on investment. Some of the market ratios are Payout ratio, earnings per share, P/S ratio, and Dividend Yield.