FINANCIAL RATIOS

Question 1

Current Ratio

Question 2

Debt to Equity Ratio

Answer 2

FORMULA:
(Total Liabilities/Total Equity) x 100
REASONS:
- Measurement of long-term financial stability
- We can see higher gearing the less solvent a business becomes
- Higher the ratio = the more financially unstable the business is
INFO:
Businesses in a risky position will have high:
- High level of leverage
- Highly geared
- Low-level solvency