Current Ratio – Formula, Meaning, Assumptions and Interpretations
February 12, 2025
Proponents of the free market generally believe that competition is good for the economy. They argue in favor of the competition every time. Hence, it is natural for them to feel that competition in taxes is also good. The general argument is that competition forces the governments to rationalize and become more efficient. However, there […]
Entrepreneurs who start up new companies have to deal with a lot of different types of stakeholders. As a result, they have to enter into a wide variety of agreements with these different stakeholders. Over the course of time, it is possible that the entrepreneur and an external party may not agree on some of […]
The business of sports can be asset-intensive and can lead to negative cash flows for a number of years. Sporting franchises have to shell out huge sums of money in order to build new stadiums and also to ensure that the best players are playing for their teams. Also, the legal structure as well as […]
Financial modeling is an intensive technology process. This means that at the present moment also, financial models use the latest technology in order to ensure that the most up to date results are available during the simulation. However, with the passage of time, technology is also advancing rapidly. Improvements like machine learning, robotic process automation, […]
The goal of personal finance is to accumulate wealth and then disseminate it at the right time in order to meet specified goals. Most investors try to accomplish all their goals within their lifetime. However, sometimes their goals may be leftover post their death or when they have become medically unfit. Similarly, there may be […]
Ratio analysis is one of the oldest methods of financial statements analysis. It was developed by banks and other lenders to help them chose amongst competing companies asking for their credit. Two sets of financial statements can be difficult to compare. The effect of time, of being in different industries and having different styles of conducting business can make it almost impossible to come up with a conclusion as to which company is a better investment. Ratio analysis helps creditors solve these issues. Here is how:
Here is where the investors get the data they require for ratio analysis:
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