# Calculate Ratios and Explain Their Results

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n order to get an accurate comparison of firms’ performance, ratios are important components that should be used when determining how organizations are performing or have performed. There are four (4) main categories of ratios. These are profitability, liquidity, business risk, and financial risk ratios. . The profitability ratio perhaps is the most calculated and evaluated as both managers and investors use these to measure success. Other important categories of ratios that are used in determining a firm’s performance are, coverage, stability, and control ratios.

The liquidity ratio attempts to measure the ability of the firm to meet short-term obligations. Short-term obligations are defined as those that are due within 12 months. The debt ratios measure the longer solvency of the company. There are several types of activity ratios that assess inventory management and accounts receivable management. Example of the market-based ratios include the price-to-earnings ratio.

For this week’s assignment, identify and describe the five (5) most important ratios for a potential equity investor. Explain the reasoning for your selection. Illustrate your discussion using numerical examples and respond to the following:

Provide ratio comparisons of three companies.
Identify and describe the five (5) most important ratios for a potential bond investor in a corporate bond issuance. Explain the reasoning for your selection. Illustrate your discussion using numerical examples.
Identify and describe the five most important ratios for a potential bank investment in a short-term corporate loan. Explain the reasoning for your selection. Illustrate your discussion using numerical examples.
Identify and describe the five most important ratios for a potential shareholder to assess prior to making a stock purchase in a company. Explain the reasoning for your selection. Illustrate your discussion using numerical examples.
Provide recommendations on how the company could improve the results for each ratio identified.
Length: 10 to 12-slide PowerPoint

References: Include a minimum of 5 scholarly resources.

The completed assignment should address all of the assignment requirements, exhibit evidence of concept knowledge, and demonstrate thoughtful consideration of the content presented in the course. The writing should integrate scholarly resources, reflect academic expectations and current APA standards