Investor to understand the financial ratios


Problem:

Financial ratios are important to the understanding of the financial health of a company. You and your colleagues work for a financial services firm. You are discussing the merits of the various financial ratios. Identify 4 financial ratios, and state what they tell you about a firm and why it's important to understand what these ratios mean to both a bank and an investor. Be sure to include your reasoning regarding these issues.

Choose 4 different financial ratios.

Answer the following questions:

- What do they tell you about a firm?

- Why is it important for a bank to understand these financial ratios?

- Why is it important for an investor to understand these financial ratios?

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Accounting Basics: Investor to understand the financial ratios
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