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Measure of profitability in relation to sales revenue, this ratio determines the net income earned on the sales revenue generated. Formula: Net income x 100 ÷ Sales revenue.

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12y ago

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What are the limitations of the current ratio?

Ratios can provide clues to the company's performance or financial situation. However, it will not show whether performance is good or bad. Ratio's require additional quantitative information for an informed analysis to be made.


Types of ratios?

1 - Actiivty raios 2 - turnover ratios 3 - Profitability ratios 4 - Liquidity Ratios


What are the advantages and disadvantages of financial ratios?

Financial ratios can be used for comparison • between two or more companies (ex: comparison between ICICI and HDFC Banks) • between two or more industries (ex: comparison between the Banking and Auto industry) • between different time-periods for the same company (ex: comparison on the results of the company in the current financial year and the previous year) • between a single company and the industry performance Ratios are generally meaningless unless we benchmark them against something else. Like say past performance or another company. Ratios of firms that operate in different industries, which face different risks, capital requirements, competition, customer demand etc can be very hard to compare.


What are the benefits in using ratios for accounting?

what are the beniftes in using ratios in accounting


How can management use financial ratios?

Financial ratios can be used for comparison • between two or more companies (ex: comparison between ICICI and HDFC Banks) • between two or more industries (ex: comparison between the Banking and Auto industry) • between different time-periods for the same company (ex: comparison on the results of the company in the current financial year and the previous year) • between a single company and the industry performance Ratios are generally meaningless unless we benchmark them against something else. Like say past performance or another company. Ratios of firms that operate in different industries, which face different risks, capital requirements, competition, customer demand etc can be very hard to compare.

Related Questions

What are the Performance ratios for office supply retailers?

performance ratios for office supply retailers


What other 3 feilds of study use ratios?

Ratios are extensively used in finance, where they help assess a company's performance and financial health through metrics like debt-to-equity and price-to-earnings ratios. In healthcare, ratios such as nurse-to-patient and mortality rates are critical for evaluating care quality and resource allocation. Additionally, in engineering, ratios are employed in various calculations, such as aspect ratios in design and efficiency ratios in performance assessments.


Can you explain how bike gear ratios work and why they are important for cycling performance?

Bike gear ratios determine how easily you can pedal and how fast you can go. They are important for cycling performance because they allow you to maintain an efficient cadence and adapt to different terrains. Lower gear ratios make it easier to pedal uphill, while higher gear ratios help you go faster on flat roads. By shifting gears, cyclists can optimize their pedaling efficiency and overall performance.


Why ratios is calculated?

To see the Firms Financial position Firms Performance Trend analysis


How do you measure company performance?

You can measure a company's performance by assessing their financial position. There are many financial ratios that can be used to see if a company is performing.


When you are interpreting financial ratios is it useful to compare a companys ratios to some form of standard?

Yes, comparing a company's financial ratios to some form of standard is useful in interpreting the ratios. It allows for benchmarking and provides context to understand whether the company's performance is above or below industry averages or competitor benchmarks. This comparison helps to identify strengths and weaknesses, and evaluate the company's financial health and performance.


What is the significance of bicycle gear ratios in determining the efficiency and performance of a bike?

Bicycle gear ratios are important because they determine how easily a rider can pedal and how fast they can go. The right gear ratio can make pedaling more efficient and help the rider go faster with less effort. Different gear ratios are used for different terrains and riding conditions to optimize performance.


What value do financial ratios offer investors in reviewing financial performance of a firm?

Investors look at financial ratios to understand how businesses are performing. They use this information to determine whether they would like to invest or not.


What value do financial ratios offer investors in reviewing the financial performance of a firm?

Investors look at financial ratios to understand how businesses are performing. They use this information to determine whether they would like to invest or not.


When are ratios useful?

Ratios are useful for comparing the relative sizes of different quantities, allowing for easier analysis of financial performance, operational efficiency, and overall health of a business. They help in identifying trends over time, benchmarking against industry standards, and making informed decisions. Additionally, ratios can simplify complex data, making it more accessible for stakeholders to understand a company's performance at a glance.


What are the factors to consider when selecting cycling gear ratios for optimal performance and efficiency?

When selecting cycling gear ratios for optimal performance and efficiency, factors to consider include the terrain you will be riding on, your fitness level, desired speed, and cadence. It is important to choose gear ratios that allow you to maintain a comfortable pedaling cadence while also providing enough resistance for power and speed. Experimenting with different gear combinations and seeking advice from experienced cyclists can help you find the best ratios for your riding style.


What has the author Edmund James Welland written?

Edmund James Welland has written: 'The effect of two density ratios and two background ratios on the visual search performance of two achievement groups.' -- subject(s): Visual perception