Financial Reasons
Financial ratios are indicators to determine whether the entity subject to evaluation is solvent, productive, if you have liquidity.
Some of the financial ratios are:
- Working Capital: This ratio is obtained from the difference between assets and liabilities. Represents the amount of resources the company has to cover the expenses necessary for operation.
- Acid test: It is used to evaluate the immediate ability to pay for companies. Obtained by dividing current assets (ie cash and banking and securities readily marketable) between current liabilities (short term).
- Customer Receivable Turnover: This ratio is calculated by dividing operating income between the amount of accounts receivable. Reflects the number of times they have rotated the accounts receivable in the period.
- Name of property: Reflects the extent to which the owners or shareholders have contributed to the purchase of all assets. Is obtained by dividing stockholders’ equity by total assets.
- Reason for debt: This ratio is complementary to the previous because it means the proportion or percentage of the total owed active. Is calculated by dividing total liabilities by total assets.
- Extreme liquidity ratio, reflects the ability to pay have to end the period. Is obtained by dividing current assets by total liabilities. Represents the monetary units available to cover each of total liabilities. This situation will only be submitted to liquidate or dissolve a company for any reason.
- Book value of shares: Indicates the value of each title and is calculated by dividing total equity by the number of shares subscribed and paid.
- Rate of Return: This means the total investment return for shareholders. Is calculated by dividing net income after tax, from equity.
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