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What three financial ratios are the most important for external and internal users?

(1) What three ratios would you list as the most important? Why?

(2) Which ratios would external users be most interested in? Why?

(3) Which ratios would best help internal users manage the business? Why?

(4) Beyond the basic financial statements what other information would you want to fully analyze a company's performance? Why?

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What three ratios would you list as the most important? Why? Which ratios would external users be most interested in? Why? Which ratios would best help internal users manage the business? Why? Beyond the basic financial statements what other information would you want to fully analyze a company's performance? Why?

Following three ratios are most important:
1. Net profit margin ratio: net profit margin ratio is the ratio between the net profit during the year to the sales revenue made during the year.
Formula for net profit margin ratio= (net profit/sales revenue)*100

This ratio shows the amount of earnings made from each dollar of sales value. This ratio is important as it shows the operational efficiency of the organization in controlling the costs and increasing the sales revenue.
2. Return on assets: This ratio shows the amount of earnings made by the company for each dollar of asset value. For this purpose, operational income is to be taken into account.
Formula for ROA= ...

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This solution discusses the importance of financial ratios in 652 words.

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