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    Common Ratios Used to Analyse Financial Information

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    What are some common ratios used to analyze financial information? Which are the most important? What are some examples of how ratios are used in the decision-making process? Two popular methods of financial statement analysis are horizontal analysis and vertical analysis. What are the differences between these two methods?

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    Dear Student,

    What are some common ratios used to analyze financial information? Which are the most important? What are some examples of how ratios are used in the decision-making process? Two popular methods of financial statement analysis are horizontal analysis and vertical analysis. What are the differences between these two methods

    The common ratios used to analyze the financial information are
    Liquidity ratios:
    Current ratio, quick ratio, average collection period, inventory turnover ratio
    Profitability ratios:
    Profit margin percentage, return on equity, earnings per share, dividend yield, gross margin percentage, returns on assets
    Leverage ratios:
    Debt to total assets, times interest earned ratio, debt equity ratio, etc.
    The ...

    Solution Summary

    The following posting helps with problems regarding financial ratios. Concepts discussed include how to analyze financial information, how ratios are used in the decision-making process, popular methods of financial statement analysis and differences between two methods.

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