7.8 Ratio analysis Flashcards
1
Q
What is ratio analysis?
A
Expression of a company’s performance by dividing one variable by another (e.g. sales per store)
2
Q
Why are ratios particular useful in financial analysis?
A
They allow comparison across firms that differ in size, stage and geography.
3
Q
What are the five categories of financial ratios?
A
1 Profitability ratios 2 Asset efficiency or turnover ratios 3 Liquidity or solvency ratios 4 Gearing or debt ratios 5 Investment or market value ratios
