In interpretating financial statements, whether financial or non-financial managers normally and frequently use the standard traditional business accounting ratio like profitability, liquidity, market based, assets utilization and others. However, one ratio commonly neglected is the Z-score model which is actually a quantitative model developed in 1968 by an eminent economist, Edward Atlman. So what is [...]
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Under this heading of Interpretation of financial statements, it is a pre-requisite for any MBA student to have the ability to interpret what’s in the financial statement of a company, hence the need to understand some important financial accounting ratio. Append below are a list of all articles on interpretation of the financial statement of [...]
Normally, defensive internal or burn rate ratio is quite crucial to a start up company like the internet business.Most of the time, the start up companies are funded by venture capitalist. Their products might still need a lot of development before reaching the marketability state.
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Investors and analysts will normally deploy one particular market base accounting ratio which is the Market to Book ratio or Price-to-Book Value Ratio. This ratio expresses the relationship between a company’s value in the stock market and the net asset value as per the company’s balance sheet.
Let’s look at another useful market based ratio which is known as the Market value added ( MVA). MVA is the difference between the market value of the company and the total capital invested in the company.
In earlier articles we have gone through many ratios to assess the liquidity, profitability, market based ratio, activity of asset utilised,gearing level and cash sufficiency of a company. There is a very interesting ratio which can assist the managers to predict the probability of a company entering bankruptcy within a 2 year period. That ratio [...]
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[GO TO THE MAIN PAGE FOR ALL ARTICLES ON CASH FLOW] In Part A, we have looked at Cash sufficiency Financial ratio, let’s look at another cash flow ratio namely CASH FLOW EFFICIENCY FINANCIAL RATIO:
[GO TO THE MAIN PAGE FOR ALL ARTICLES ON CASH FLOWS] We have looked at the articles:Profit Versus Cash & Accounting on Cash Basis Versus Accrual basis.We should able to understand that the vein of an organization is its cash flow. We also have reviewed the Cash Flow Statement which is an integral part of [...]
Vice Versa to Part 4 where we can see whether a company is undercapitalized, this article is of interest to managers who might feel that a company has been ovecapitalized. Try looking at the following tell-tales/symptoms:
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In earlier articles(Part1, 2, & 3) on gearing/borrowing/leverage financial ratios, append below further information on when you can see that a company is undercapitalized or not
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