**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**

**———–**

**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).

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