Explore BrainMass

Explore BrainMass

    Financial Ratios for Mathematical Equations

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Can I please get help on interpreting the four following 4 Financial ratio categories?
    Interpretation can be short and sweet in a matter of a few sentences.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:47 am ad1c9bdddf

    Solution Preview

    There are actually five basic financial ratio categories- liquidity, asset management, financial leverage, profitability, and market value ratios. The first four categories are based on information taken from a firm's income statements and balance sheets. The fifth category (market value) relates to stock market information to financial statement items.

    Liquidity ratios use balance sheet data and is used to estimate the firms liquidity position. The less liquid the firm, the greater the risk of insolvency or default. In addition, because debt obligations are paid with cash, the firm's cash flows determine solvency. ...

    Solution Summary

    The expert examines four financial ratios for mathematical equations. Interpretation are provided.