Friday 6 October 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 measures the com-pany’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 under-stand the company’s long term sustainability, keeping its obligation in perspective.

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