Wednesday 27 September 2017

Financial Ratios

Financial Ratios


Financial ratios can be 'somewhat loosely' classified into different categories
.

1. Profitability Ratios 
2. Leverage Ratios 
3. Valuation Ratios 
4. Operating Ratios

2.The Leverage ratios also referred to as solvency ratios/ gearing ratios measure the company's ability (in the long term) to sustain its day to day operations. Leverage ratios measure the extent to which the company uses the debt to finance growth. Remember for the company to sustain its operations, it has to pay its bills and obligations. Solvency ratios help us understand the company’s long-term sustainability, keeping its obligation in perspective.


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