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    4 Important Financial Ratios

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    Identify four financial ratios and state what they tell you about a firm and why it's important to understand what these ratios mean to both a bank and an investor. Include reasoning regarding these issues.

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    Solution Preview

    In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular and handy for rule of thumb analysis of financial statements. Our purpose in this note is not deride them but to advice the reader to use them properly to derive the correct results.

    Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. In other words it helps in inter firm and intra firm comparison.

    Investor's POINT OF VIEW
    Investors will be interested in knowing about the profitability of the organization and the return that the Target is giving to its ...

    Solution Summary

    521 words to explain the importance of 4 key financial ratios from both investor and bank perspectives.

    $2.19

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