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Ratios for Investors and Managers

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You are considering investing in a company. Which financial ratios would you find most useful? Why?

You are an upper-level manager in a company. Which financial ratios would you consider most useful? Would these ratios be different than the ones you would consider useful as an investor? Why or why not?

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Solution Summary

This solution identifies the financial ratios most important for investors and managers' decision making process in 390 words with two references provided.

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You are considering investing in a company. Which financial ratios would you find most useful? Why?

The financial ratios that would be most useful from an investor's point of view are Return on Investment (ROI) ratio and Return on equity (ROE) ratio. This is because these two ratios are not only part of the profitability ratios, they also indicate how successful a company is, regarding future financial decisions that reflect the net result of all of the financing policies and operating decisions. Return on investment (ROI) "evaluates the efficiency of an investment or to compare the efficiency of a number of different investments" ...

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