Profitability ratio

**The analysis of both statements should be discussed and a graph or chart can be used to reflect the differences in the two years**

  • Financial Ratio Analysis:

Financial ratio analysis calculates and evaluates various indices that measure HSO/HS risk exposure, activity, profitability. Calculate and evaluate the liquidity ratio and profitability of your HSO from the two years of statements using the following two ratios:

Liquidity ratio

  • Current ratio: total current assets/total current liabilities (a current ratio greater than 1 means the company has enough assets to cover all current liabilities should the need arise

Profitability ratio

  • Operating margin: (operating revenue-operating expense)/operating revenue

**Analyze, compare and contrast the difference in ratios over the two years. A graph or chart can be used to reflect the differences in the two years**

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