Those ratios are considered as liquidity ratios that measure the liquidity position and short-term solvency-indicating the company’s ability to meet its short-run obligations. It means ratios that measure the debtor’s ability to pay its short-term obligations from current or liquid assets without raising external capital is known as liquidity ratios. This ratio stresses on current […]
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Meaning of Financial Ratio and Financial Ratio Analysis Financial ratios are routinely expressed measures to describe the significant relationship that exists between figures shown in income statements of companies normally spoken in the form of times, proportion, and percentage. The standard ratios a manager uses to evaluate a firm’s overall financial condition are financial ratios.
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Financial statement analysis is a technique of answering various questions regarding the performance of a firm in the past, present, and future. The analysis enables financial managers to recommend steps to be taken for the correction of faults. Here is a brief introduction to the process and techniques of financial statement analysis. The need for
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Financial statements and reports present the position of a firm in terms of monetary value at a particular point in time. The types of financial statements that business firms prepare and punish periodically are an income statement and a balance sheet. Besides, there are other special types of statements such as a statement of retained
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Financial Statements-Meaning After setting a goal of the corporation and designing the tasks and decisions accordingly the duty of the corporate manager is to report the stakeholders about the corporation’s affairs. The shareholders are the real owner of an organization. Therefore, corporate managers have to report the shareholders about the organizational financial matters that affect
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Financial management is concerned with decision making regarding the size and composition of assets and the level and structure of financing. To make a wise financial decision in any corporation requires a clear understanding of the objective that is to be achieved. So the objective or goal provides a framework for optimal financial decision making.
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Under the modern approach to financial management the business firm or financial manager has to do major three functions (at least) as; where to invest funds and amount to invest, the dividend payment ratio of the period, and from where to raise funds and in what combination and policies. The goals of financial management direct
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Financial management functions are mainly viewed from two approaches as traditional function or role and the new role or functions. Raise of funds is taken as a traditional role or function whereas raise and allocation of funds are taken as a new role of financial management or finance managers. The first approach confines the functions of financial management is the procurement of funds only and ignores the utilization of funds whereas, the second approach not only focuses on the procurement of funds but effective utilization of funds as well.
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Financial management is concerned with the procurement of funds from various sources and making the effective allocation of financial resources into productive use. It is a decision-making process relating to investment financing, asset management, dividends and so on. Finance, therefore, occupies a prime place at every stage of operation of a business like production, marketing, distribution of returns, and so on.
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