Risha O.

Alaras
Grade 12-ABM

ACTIVITY IN BUSINESS FINANCE

1. What are those types of financial ratios. Explain each of one.

 Liquidity Ratios – determine whether an entity can be able to pay for current liabilities
as they become due with the use of current assets.
 Solvency Ratios – determine whether an entity has come ownership rather than debts.
 Efficiency Ratios – measure how well does an entity utilize their assets and resources to
generate income.
 Profitability Ratios – measure how well does an entity generate income that relates to
their revenues, operating costs, assets, and capital.

2. How to get the percentage of each financial ratios.

To get the percentage of each financial ratios we need to times the answer to 100.

3. Why are those financial ratios being important in company or business? Explain.
Financial ratios are important in a company or business because financial ratios offer
entrepreneurs a way to evaluate their company performance and compare it other similar
businesses in their industry. financial ratios also used by investors to determine the health
of a business.

4. Where can we find the data being used in financial ratios? Why?
We find the data being used in financial ratios from a company’s balance sheet, income
statement, and cash flow statement or in financial statements of a company.