Financial Ratios

What is liquidity?
The level of ease to sell something

Ratio for liquidity

Current Ratio = Current Assets / Current Liabilities

What is operating efficiency?

The amount a companys managers company
assets and capital to create profits

Ratios for operating efficiency

Net profit margin = Net income / Net sales
Return on equity = Net income / Average Total Equity

What is risk?
Potential for a loss

Ratio for risk

Debt-equity ratio = Total Long Term Debt / Equity