Reply to Financial Ratios Discussion 2

Q – Please read the discussion below and prepare a Reply to this discussion post with comments that further and advance the discussion topic.

Please provide the references you used.

Ensure zero plagiarism.

Word limit: 250 words

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Discussion

Financial Ratios

Vendor: a supplier of goods would be interested in the following ratios

A supplier of goods would be interested in the following ratios Current ratio: this measures the company’s ability inn paying short term liabilities with its own short term liabilities .Debt to equity ratio : this ratio shows the proportion of the total debt to equity debt of a company.Accounts receivable turnover ration: This ratio measures how fast a company collects its payment from the customers.

• Bank providing short term financing :

A bank should provide short term financing to assess the company’s ability to repay loans Liquidity ratio: this measures the company’s strength to meeting its a short term obligations.Profitability ratio: They provide information on the company’s financial performance and profitability.Inventory turnover ratio :This measures the efficiency of the company’s inventory management.

• Bank providing long-term loan (10 years or more):

A bank would need the following ratiosDebt to capital ratio : this measures the proportion of a company’s total capital that is financed through debt.Interest coverage ratio : this indicates the company’s strength to honor its payments on debts.Debt service coverage ratio: it measures the company’s ability in honoring its debts from the operating cash flow

A long-term creditor or investor would be most interested in solvency ratios. Solvency is defined as a company’s ability to satisfy its long-term obligations for many years. The three critical solvency ratios are debt-to-equity ratio, debt ratio, and times-interest-earned ratio.

In accounting, long-term is considered any period of time greater than one year. So a long-term creditor or investor would be most interested in solvency. Liabilities are items that a company owes to the others(such as debt) and the assets are items that a company owns(such as cash and equipment). The debt ratio calculate the part of a company’s assets that have been financed by debt.

• Bond Investor :

its used when analyzing financial statements Debt to equity ratio : this shows the level of financial leverage of a company.Interest coverage ratio : its assesses the company’s ability tom pay interests on its bonds.Profitability ratios: They provide an insight into the earnings and financial performance of the company.

As an investor in common stock :

There are many financial ratios that can provide valuable insights when analyzing a company’s financial statements.1. Current Ratio:The current ratio indicates a company’s ability to pay off its short-term obligations with its current assets. 2. Return on Equity (ROE):The ROE ratio shows the profitability of a company by indicating how much profit a company generates with the shareholders’ equity. 3. Price-to-Earnings (P/E) Ratio:The P/E ratio shows a company’s stock price relative to its earnings per share (EPS).

Q – Please read the discussion below and prepare a Reply to this discussion post with
comments that further and advance the discussion topic.
Please provide the references you used.
Ensure zero plagiarism.
Word limit: 200 to 250 words
Discussion
Financial Ratios
• Vendor: a supplier of goods would be interested in the following ratios
A supplier of goods would be interested in the following ratios
Current ratio: this measures the company’s ability inn paying short term liabilities with its own short
term liabilities .
Debt to equity ratio : this ratio shows the proportion of the total debt to equity debt of a company.
Accounts receivable turnover ration: This ratio measures how fast a company collects its payment
from the customers.
• Bank providing short term financing :
A bank should provide short term financing to assess the company’s ability to repay loans
Liquidity ratio: this measures the company’s strength to meeting its a short term obligations.
Profitability ratio: They provide information on the company’s financial performance and profitability.
Inventory turnover ratio :This measures the efficiency of the company’s inventory management.
• Bank providing long-term loan (10 years or more):
A bank would need the following ratios
Debt to capital ratio : this measures the proportion of a company’s total capital that is financed through
debt.
Interest coverage ratio : this indicates the company’s strength to honor its payments on debts.
Debt service coverage ratio: it measures the company’s ability in honoring its debts from the operating
cash flow
A long-term creditor or investor would be most interested in solvency ratios. Solvency is defined as a
company’s ability to satisfy its long-term obligations for many years. The three critical solvency ratios
are debt-to-equity ratio, debt ratio, and times-interest-earned ratio.
In accounting, long-term is considered any period of time greater than one year. So a long-term
creditor or investor would be most interested in solvency. Liabilities are items that a company owes to
the others(such as debt) and the assets are items that a company owns(such as cash and
equipment). The debt ratio calculate the part of a company’s assets that have been financed by debt.
• Bond Investor :
its used when analyzing financial statements
Debt to equity ratio : this shows the level of financial leverage of a company.
Interest coverage ratio : its assesses the company’s ability tom pay interests on its bonds.
Profitability ratios: They provide an insight into the earnings and financial performance of the
company.
As an investor in common stock :
There are many financial ratios that can provide valuable insights when analyzing a company’s
financial statements.
1. Current Ratio:
The current ratio indicates a company’s ability to pay off its short-term obligations with its current
assets.
2. Return on Equity (ROE):
The ROE ratio shows the profitability of a company by indicating how much profit a company
generates with the shareholders’ equity.
3. Price-to-Earnings (P/E) Ratio:
The P/E ratio shows a company’s stock price relative to its earnings per share (EPS).
Q – Please read the discussion below and prepare a Reply to this discussion post with
comments that further and advance the discussion topic.
Please provide the references you used.
Ensure zero plagiarism.
Word limit: 200 to 250 words
Discussion
Financial Ratios
• Vendor: a supplier of goods would be interested in the following ratios
A supplier of goods would be interested in the following ratios
Current ratio: this measures the company’s ability inn paying short term liabilities with its own short
term liabilities .
Debt to equity ratio : this ratio shows the proportion of the total debt to equity debt of a company.
Accounts receivable turnover ration: This ratio measures how fast a company collects its payment
from the customers.
• Bank providing short term financing :
A bank should provide short term financing to assess the company’s ability to repay loans
Liquidity ratio: this measures the company’s strength to meeting its a short term obligations.
Profitability ratio: They provide information on the company’s financial performance and profitability.
Inventory turnover ratio :This measures the efficiency of the company’s inventory management.
• Bank providing long-term loan (10 years or more):
A bank would need the following ratios
Debt to capital ratio : this measures the proportion of a company’s total capital that is financed through
debt.
Interest coverage ratio : this indicates the company’s strength to honor its payments on debts.
Debt service coverage ratio: it measures the company’s ability in honoring its debts from the operating
cash flow
A long-term creditor or investor would be most interested in solvency ratios. Solvency is defined as a
company’s ability to satisfy its long-term obligations for many years. The three critical solvency ratios
are debt-to-equity ratio, debt ratio, and times-interest-earned ratio.
In accounting, long-term is considered any period of time greater than one year. So a long-term
creditor or investor would be most interested in solvency. Liabilities are items that a company owes to
the others(such as debt) and the assets are items that a company owns(such as cash and
equipment). The debt ratio calculate the part of a company’s assets that have been financed by debt.
• Bond Investor :
its used when analyzing financial statements
Debt to equity ratio : this shows the level of financial leverage of a company.
Interest coverage ratio : its assesses the company’s ability tom pay interests on its bonds.
Profitability ratios: They provide an insight into the earnings and financial performance of the
company.
As an investor in common stock :
There are many financial ratios that can provide valuable insights when analyzing a company’s
financial statements.
1. Current Ratio:
The current ratio indicates a company’s ability to pay off its short-term obligations with its current
assets.
2. Return on Equity (ROE):
The ROE ratio shows the profitability of a company by indicating how much profit a company
generates with the shareholders’ equity.
3. Price-to-Earnings (P/E) Ratio:
The P/E ratio shows a company’s stock price relative to its earnings per share (EPS).