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"Financial Ratio Formulas Checklist"

This Financial Ratio Formulas checklist provides you with a list of the most popular financial ratios used to assess an organization's performance, solvency, profitability and investment potential. It includes general notes on how to make valid comparisons and which financial statements you will need to make these calculations.

Financial ratios are used in two ways: for internal analysis of items in a balance sheet and for comparative analysis of an organization's ratios at different time periods and in comparison to others in the same sector.

These ratios can be divided into three groups:

• Solvency ratios: to measure the ability of an organization to meet its long-term debts
• Profitability ratios: to measure an organization's ability to generate earnings relative to sales, assets and equity and in doing so, highlight how effectively the profitability of a company is being managed
• Performance ratios: measure how efficiently an organization uses and controls its assets as well as how effectively it is collecting money from customers etc.

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