Which do you think is more useful: horizontal and vertical analysis or ratio analysis?
My answer would have to be Ratio Analysis only because it appears to in composes both Vertical analysis and Horizontal Analysis. Being based on line items, and the use of being able to evaluate various aspects of a company operating and financial performance. Being able to analysis a company’s efficiency, liquidity, profitability and solvency are very important. While Vertical analysis is going to cover the three major categories of accounts (assets, liabilities and equities). While horizontal analysis is fundamental, based on the investing time horizon.
Name and give the formula for two of the profitability ratios. Describe what these ratios can tell you
Return on Equity – How much money the company has generated with the money Shareholders into the company, while providing insight into the fincial health of the company.
ROE = ________________________
Avg Stockholder’s Equity
Return on assets – The earning generated from the total assets or resources the company has, while providing insight into the fincial health of the company.
Annual Net Income
Average Total Assets
Name and give the formula for two of the liquidity ratios. Describe what these ratios can
Current Ratio = ___________________
Used to test a company’s liquidity.
Cash + Accounts Receivable
Quick Ratio = _________________________
Indicator of a company short term liquidity.
Both can tell you about the company’s ability to pay back its debit / liabilities.
I NEED A PEER REPLY FOR THIS