MA 115 Financial Ratio

Are a subset of financial ratios used in management accounting that assess a company's ability to meet

its short-term financial obligations with its liquid assets.

It measures the company's ability

to cover its short-term obligations with its short-term assets.

It reflects a company's ability to meet its short-term liabilities without relying on the sale of inventory, which may take

time to convert into cash.

It provides a clear picture of a company's ability to meet immediate obligations

without relying on receivables or inventory.

These ratios provide valuable insights into a

company's financial performance and profitability.

Measures the percentage of revenue that remains after deducting the cost of

goods sold (COGS)

Represents the percentage of revenue that remains as net income after all expenses,

including operating expenses, interest, and taxes, have been deducted.

A company's core operations, excluding non-operating

income and expenses such as interest and taxes.

Measures the efficiency with which a company utilizes its assets to generate profit.

It measures the return on

the shareholders' equity investment in the company.