Introduction

Investors and other external users of financial information will often need to measure the performance and financial health of an organization. This is done in order to evaluate the success of the business, determine any weaknesses of the business, compare current and past performance, and compare current performance with industry standards. Financially stable organizations are desirable, because a financially stable business is one that successfully ensures its ability to generate income for investors and retain or increase value.

There are many different methods that can be used alone or together to help investors assess the financial stability of an organization. One of the most common methods is financial ratio analysis. The basic ratios include five categories: profitability ratios, liquidity ratios, debt ratios, and asset activity ratios.

Profitability Ratios

Profitability ratios measure the profitability of the organization. They include the gross......

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Title: Financial Ratios
Approximate Word Count: 1055
Approximate Pages: 5 (250 words per double-spaced page)

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