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Financial statements-usually the income statement

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    Assignment ID: FG133141781

    Financial ratios are relationships between different accounts from financial statements-usually the income statement and the balance sheet-that 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 firm’s performance can be analyzed using the following financial ratios:

    Liquidity ratios

    Solvency ratios

    Asset management ratios

    Profitability ratios

    Market value ratios

    What does each ratio do for a business?

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