# Category: FINANCIAL ANALYSIS

## What is Financial Ratio Analysis?What is Financial Ratio Analysis?

Ratio analysis is the quantitative analysis of financial information available in the financial statements. Financial ratios provide a detailed insight into the Company’s operational performance especially when analyzed over consecutive

## Profitability RatiosProfitability Ratios

In the above example, the company has a very good gross profit ratio and it is increasing each year which shows that either company is able to increase its

## Liquidity RatiosLiquidity Ratios

In the above example, Company has an unsatisfactory current ratio of 0.73 in the year 2013 which is improving in the years 2014 and 2015 owing to a decrease in

## Solvency RatiosSolvency Ratios

Ratio Description Formula Debt Equity Ratio The debt ratio is the ratio of a company’s total debts to its total business capital (equity + debt). A high debt/equity ratio generally

## Working Capital RatiosWorking Capital Ratios

Ratio Description Formula Inventory turnover ratio / Days Inventory in Hand Inventory turnover is an efficiency ratio which measures business’ efficiency based on number of times it is able to

## What Is the Importance of Investor Ratios?What Is the Importance of Investor Ratios?

Ratio Description Formula Earnings Per Share EPS is calculated by dividing net after tax income of the company subject to deduction of dividend payable on preference shares (if any) by

## Horizontal AnalysisHorizontal Analysis

Horizontal Analysis also termed as Trend Analysis compares a company’s performance over the years i.e. as compared to the last year(s). The number of years over which analysis is required,

## Vertical AnalysisVertical Analysis

Vertical analysis is the analysis technique in which individual line items are compared against the total amounts. i.e. Individual asset equity and liabilities line items on balances sheet are analyzed

## What is a Capital Budgeting? | Importance of Capital BudgetingWhat is a Capital Budgeting? | Importance of Capital Budgeting

Capital budgeting is the process of evaluating commercial worthiness of a project or investment in a major venture such as purchase or overhaul of plant & machinery, product research &

## Cost of CapitalCost of Capital

The cost of capital is the cost of funds for the Company i.e. the rate at which the Company has gathered the finance required to run the business or a