Glory Important Financial Ratios
The PE ratio reflects the price currently being paid by the market for each rupee of currently reported EPS.
Important financial ratios. Importance of Financial Ratios. These ratios answer many different kinds of questions that can be asked about a business performance. So what are some of the most important financial ratios.
Total capital employed is the accounting value of all interest-bearing debt plus all owners equity. Ii They also help a business to compare the financial results to those of competitors. The formula used to compute this ratio is Total Liabilities Shareholders Equity.
The importance and advantages of financial ratios are given below. So if you have 50000 in debt and 50000 of shareholders equity your financial leverage would be 2 or 100000 divided by 50000. The price-to-earnings ratio or PE is likely the most famous ratio in the world.
Financial ratios are the perfect tool for investors to measure the health of a company. This way it is possible to allocate funds for what is intended to do. Price to earnings ratio is one of the most widely used financial ratio by the investors throughout the world.
Financial ratios allow an analyst to quickly analyze a company and its operations and understand the financial situation of a company. As it provides beneficial information about the company such as balance sheets cash flow and income statements etc. The current ratio is measured by dividing a companys current assets by its current liabilities.
Some of these ratios include earnings ratio asset turnover ratio inventory turnover ratio working capital ratio interest coverage ratio peg ratio growth ratio accounts receivable turnover dividend yield gross profit margin dividend payout ratio and valuation ratios. This financial metric measures the ability of a company to pay off its short-term obligations. The five commonly used financial ratios categories are the liquidity ratios efficiency ratios profitability ratios growth ratios and leverage ratios.