Evaluating financial health
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In general, what questions would you ask to decide how to weight financial ratios when evaluating the financial health of an entity?
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This solution discusses evaluating the financial health of an entity.
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The weight of each financial ratio is the relative importance of each financial ratio to the entity.
In order to determine this, we need to ask questions regarding the specific industry or nature of the business entity. The relative importance or weight of each financial ratio stems out from the industry or the nature of the entity. For example, ratios pertaining to manufacturing, inventory turnover etc. will have more weight in manufacturing entity than a service entity which has zero or no ...
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- BCom, SGTB Khalsa College, University of Delhi
- MBA, Rochester Institute of Technology
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