Fill the following terms (ratios) to relevant spaces: (Market Value Ratios / Profitability Ratios / Debt...

Fill the following terms (ratios) to relevant spaces: (Market Value Ratios / Profitability Ratios / Debt Ratios/ Liquidity Ratios / Efficiency Ratios)

a. ____________How well the company is using its assets and liabilities internally.

b. ___________ are to determine whether a company's is over-priced or underpriced.

c. ____________ can be used to determine the overall level of financial risk a company and its shareholders face.

d. ___________ Assess the firm's ability to operate efficiently

e. ____________Are used to measure the liquidity of the firm.

Expert Solution

a. Efficiency Ratios How well the company is using its assets and liabilities internally.

b. Market Value Ratios are to determine whether a company's is over-priced or underpriced.

c. Debt Ratios can be used to determine the overall level of financial risk a company and its shareholders face.

d. Profitability Ratios Assess the firm's ability to operate efficiently

e. Liquidity Ratios Are used to measure the liquidity of the firm.

**Some Additional Points:

Efficiency Ratios : These ratios are used by the company's internal management to check the performance of the company.

Market Value Ratios : These ratios are helpful for the current and potential investors to decide whether to invest in a company's shares or not.

Debt Ratios: These ratios are useful to determine how much part of capital is comprised of debt and how much company is dependent on the external borrowings ie. measuring the financial risk of the company.

Profitability Ratios: These ratios are majorly of two types, ie 1. Income Statement Ratios and 2. Income Statement and Balancesheet Ratios

Liquidity Ratios: These ratios help the users of financial statements to analyse the capacity of the firm to pay its current liabilities without taking funds from external sources.

jeff jeffy answered 1 year ago

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