Key Financial Ratios

p Marketing 4 Running Head : Marketing Ratios

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[The name of the institution appears here] During the analysis of an entity 's financial statements different ratios are used such as liquidity ratios , activity ratios profitability ratios , leverage ratios and market ratios . Liquidity ratios are used to show the organization 's ability to meet its short term obligations while leverage ratios indicate about the companies long term solvency situation . Profitability ratios give a picture about the growth and profit making capabilities of the company . All

these ratios have their own importance and their limitations . Which ratio is best depends upon the intended use and the underlying decision of the user of the financial statement (Internet Center for Management and Business Administration Inc

For being successful in determining which entity is best to invest in results of entity 's financial statements are analyzed by investors preferably using market ratios . There are many investment ratios which help a financier decide that such as profit earnings ratios . It is commonly used to determine whether the cost of investment is worthwhile by comparing it with earnings . Earnings per share are most widely used ratio and are a good indicator towards showing consistency in company 's growth . So for shareholders looking for growth in a company will definitely be eyeing on this ratio . Return on equity , on the other hand shows how well a company is performing with respect to making profits managing its assets and leveraging . Dividend payout ratio is...