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175 – 265 words

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Respond to the following:

 

Dr. Susan Jones

19 hours ago, at 12:51 AM

Financial ratios are relationships between different accounts from financial statementsusually the income statement and the balance sheetthat serve as performance indicators. Being relative values, financial ratios allow for meaningful comparisons across time, between competitors, and with industry averages.

Five key areas of a firms performance can be analyzed using the following financial ratios:

  1.  Liquidity ratios
  2. Solvency ratios
  3. Asset management ratios
  4. Profitability ratios
  5. Market value ratios

What does each ratio do for a business?

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