Analyzing Financial Statements And Evaluating A Firm S Performance

Unformatted Attachment Preview

Running head: Analyzing Financial Statements and Evaluating a Firm’s Performance
Analyzing Financial Statements and Evaluating a Firm’s Performance
University
Student’s name
Course title
Professor’s name
Date
1
Analyzing Financial Statements and Evaluating a Firm’s Performance
2
The two ratios that are valuable in understanding the financial condition of a company are
the quick ratio and the return on equity. The quick ratio is calculated by dividing the most current
assets by the total current liabilities. The ratio is chosen because it shows an organization’s
ability to finance its current assets using the most liquid assets within a given financial year. A
quick ratio above one shows that the organization is financially stable to finance its current debts
using the most liquid assets (Keown, Martin & Petty, 2017). The second ratio is return on equity,
which is calculated by dividing net income by total equity. The ratio is important because it
indicates the organization’s efficiency in using its shareholders’ investments to generate profit. A
higher ratio shows that the organization is more efficient at converting shareholders’ investments
into profit.
The …
Purchase document to see full attachment

Don't use plagiarized sources. Get Your Custom Assignment on
Analyzing Financial Statements And Evaluating A Firm S Performance
From as Little as $13/Page