-List THREE (3) major forces behind the credit crisis from 2007 to 2008. -Discuss the relevance...

-List THREE (3) major forces behind the credit crisis from 2007 to 2008.

-Discuss the relevance in calculating the financial ratio for short term and long term operations.

Expert Solution

1. Three major factors behind credit prices were-

A. Improper management of credit by regulatory authorities and approval of credit to bad borrowers.

B. Inflation in the real estate prices to an extent that was not sustainable.

C.high exposure to the derivative market by introduction of hybrid securities that can have destructive effect as it was inflicted in the financial crisis.

2.financial ratio for short term and long term operations are very important because they will help in getting an idea about the performance of the company in the short run and in the long run.

These financial ratio will help the company in maximization of the overall profit by comparison of the actual from the standard and it will also help the company to find out whether the company is performing according to the industry standards or not.

it will also help various investors to make investment related decisions in these companies and find out the actual standing of the company in respect to the overall industry.

jeff jeffy answered 1 year ago

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