Question

explain the importance of the financial ratios in marking investment decisions and in running a corportion. with detail.

Answer 1

Importance of the financial ratios in marketing investment decisions and running a corporation are as follows-

A. Financial ratios will be providing with the ability of the organisation in respect to the liquidity of the organisation and it will help in making investment related decision to marketing and it will be helpful in taking decisions only after not getting affected on the Liquidity front.

B. Financial issues will also ve providing with the management of the organisation about solvency of the company from the short term perspective as well as the long-term perspective and it will be trying to analyse the capital structure of the company in a better manner and it will also help the company to select various project according to the capital structure.

C. financial ratios will also provide a comparative analysis of the performance of the company in respect to its peers and the management will be trying to ascertain the performance of the company and compare it with the industry benchmark and it will be trying to always improve by comparing the performance of the company and it will always take corrective action so ratio analysis will be helpful for the management in order to take decisions accordingly.

D. ratio analysis will also provide the management and idea about the profitability of the company in respect to the total volume and margins which are generated by the company so it will not be just impacting the overall revenues but it will also calculate the margin on those revenue so it wilhelp the management in order to find out the deficiency of the management in order to maximize the profit.

E. Ratio analysis will also provide with a detailed approach of the the performances of the company in respect to various years and it will also act as a base of the comparative analysis of a company with respect to its self performance within different period so it will help the management in order to analyse the effectiveness of utilisation of its Assets and maximisation of its earnings as well as profits..