Volume : IV, Issue : X, October - 2015

ACCOUNTING RATIOS AS AN IMPORTNT TOOL TO FINANCIAL STATEMENT ANALYSIS

Dr. Vishal Saxena

Abstract :

Most financial statement analyses focus on firms belonging to industries that either contribute significantly to economic figures or posit in a highly competitive business environment. Whatever the motivation may be, financial statement analysis should be made available to all industries for reasons of comparability and benchmarking. This research paper aims to analyze the Accounting ratios and their importance as a tool to analyze the position of various companies and related industries. These included liquidity ratios, activity ratios, leverage ratios, profitability ratios, and market value ratios. For liquidity, the following ratios were used: current ratio; quick or acid-test ratio; cash flow liquidity ratio; average- collection period; and days payable outstanding. For activity, the following ratios were used: accounts receivable turnover; accounts payable turnover; fixed assets turnover; and total assets turnover. For leverage, the following ratios were used: debt ratio; debt to equity ratio; and times interest earned. For profitability, the following ratios were used: operating profit margin; net profit margin; return on total assets; return on equity; and basic earning power ratio. For market value, the following ratios were used: price-earnings ratio; market-book ratio; and dividend yield.

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Article: Download PDF    DOI : https://www.doi.org/10.36106/gjra  

Cite This Article:

Dr. Vishal Saxena Accounting Ratios as an Importnt Tool To Financial Statement Analysis Global Journal For Research Analysis, Vol: 4, Issue: 10 October 2015

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