Ratios are fundamental tools in financial analysis that provide insights into a company’s performance, financial health, and valuation. They help investors, analysts, and financial professionals assess various aspects of a company’s operations and make informed decisions. Here are some common ratios used in financial calculations: **1. Liquidity Ratios: **2. Profitability Ratios: **3. Efficiency Ratios: **4. […]
The Price-Earnings Ratio (P/E ratio), also known as the Price-to-Earnings Ratio, is a financial metric that compares a company’s current share price to its earnings per share (EPS). It is a widely used valuation ratio that helps investors and analysts assess a company’s stock price relative to its earnings and provides insights into its valuation. […]
The Return on Assets (ROA) ratio is a financial metric that measures a company’s profitability relative to its total assets. It assesses how efficiently a company generates profits from its investment in assets. The formula for calculating the ROA ratio is as follows: ROA = (Net Income) / (Total Assets) Here’s a step-by-step guide on […]
The Acid-Test Ratio, also known as the Quick Ratio, is a financial metric used to assess a company’s short-term liquidity and ability to pay its immediate obligations without relying on the sale of inventory. It is a more conservative measure of liquidity than the current ratio because it excludes inventory, which may not be as […]