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common ratios; prediction for long term viability

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What are the three most common ratios?
Why are they so important?
Which ratios would you use to determine the long-term viability of an organization?
Why?

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Solution Summary

Discussion in everyday language suitable for novice. A sheet of common ratios with interpretations is provided.

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See attached file.

The three most common ratios are likely profit margin, return on assets and return on equity.

These measures are important because they tell you whether the business activities were successful in three important ways:

Profit margin: Tells you if you are successful in the market place. That is, are you selling enough products at high enough prices to cover your ...

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  • MSc, University of Virginia
  • PhD, Georgia State University
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