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Financial Planning and Ratio Balance Sheets

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I have to answer these questions below in 350 words. I have been reading the chapter and don't fully understand these questions:

Discuss the four types of ratios used in balance sheet analysis and the importance of each?

Discuss different ways a financial manager can determine his/her future financing needs. Include ways of determining the need for external financing.

"The Du Pont System links profitability and efficiency measures in useful ways". Discuss the meaning of this statement.

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Solution Summary

The solution explains some discussion questions relating to ratio analysis, external financing needs and Du Pont system

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Discuss the four types of ratios used in balance sheet analysis and the importance of each?

The four types of ratios are - liquidity, activity, leverage and profitability.
Liquidity ratios are used for short term measurement and measure the ability of the firm to meet its current liabilities from current assets. A current ratio greater than 1 implies that current assets are sufficient to meet the current liabilities.
Activity ratios measure the efficiency in the use of assets. How much investment in assets is needed for each $ in sales. The higher the ratio, the better it is since it implies that more sales are generated from lower ...

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