Ratio Overview Flashcards
1
Q
What are the five ways to measure a company’s position?
A
1) Profitability
2) Liquidity
3) Solvency
4) Activity
5) Equity Analysis
2
Q
What is Profitability?
A
Used to determine the scope of a company’s profit in relation to the size of a business.
3
Q
What is Liquidity?
A
The ability of a business to pay its debts using its liquid assets.
4
Q
What is Solvency?
A
The ability of a company to meet its long term financial obligations.
5
Q
What is Activity?
A
A firm’s ability to convert different accounts within its balance sheets into cash or sales.
6
Q
What is Equity Analysis?
A
Represents the real value of one’s stake in an investment.
