A company that presents “Facts Behind The Figures” to an investing public from the floor of a stock exchange is showing, not only the bare bones of its financials, but also clarifying the realities, assumptions, discretions, and even the emotions, that informed the figures being presented.
These “truths” will not always be apparent in the “hardened” numbers. Most times it takes those who prepared the reports to unravel its riddle. What accountants and financial experts refer to as financial ratios, are further attempts to provide perspectives that may not easily yield to cursory examination. More meets the eye in every financial statement.
A financial ratio is a relationship between two or more elements of a company’s financial information. Key financial ratios are Working Capital Ratio, Quick Ratio, Debt-Equity, Return on Equity, Earnings Per Share, and Price-Earnings RatIo.
While Working Capital is concerned with how a company can easily turn current…