By Understanding And Applying The Different Business Ratios,
Financial Ratios & Ratio Analysis You Are In Control Of Your
Business Business Ratios & Financial Ratios Business Ratios are
mathematical relationships between various balance sheet and
income statement items. Ratio analysis, which relates balance
sheet and income statement items to one another, permits the
charting of a firms history and the evaluation of its present
position. What one ratio will not indicate, another may. Also, a
relation vaguely suggested by one ratio may be corroborated by
another For these reasons, it is often useful to calculate a
number of different ratios; however, in doing the analysis, use
only those ratios that are meaningful for the particular company
being analyzed. Four Types of Ratios Liquidity Ratios - measure
firm's ability to meet current obligations - Current Ratio- CA /
CL, should be >1:1 Even if the current ratio appears adequate, a
cash shortage could occur if large current liabilities come due
before receivabl