Search results
Results from the WOW.Com Content Network
Values used in calculating financial ratios are taken from the balance sheet, income statement, statement of cash flows or (sometimes) the statement of changes in equity. These comprise the firm's "accounting statements" or financial statements. The statements' data is based on the accounting method and accounting standards used by the ...
Return on capital employed is an accounting ratio used in finance, valuation, and accounting. It is a useful measure for comparing the relative profitability of companies after taking into account the amount of capital used. [1]
For a corporation with a published balance sheet there are various ratios used to calculate a measure of liquidity. [1] These include the following: [2] The current ratio is the simplest measure and calculated by dividing the total current assets by the total current liabilities. A value of over 100% is normal in a non-banking corporation.
Current ratio vs. quick ratio vs. debt-to-equity Other measures of liquidity and solvency that are similar to the current ratio might be more useful, depending on the situation.
A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. [6]
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at turning capital into ...
Profit is a simple, yet powerful calculation that tells you whether your business is viable in the long run.
One of the many variables lenders use when deciding whether or not to loan you money is your debt-to-income ratio or DTI. Your DTI reveals how much debt you owe compared to the income you earn.