financial ratios? (1 Viewer)

meilz92

where are my hair
Joined
Jul 22, 2008
Messages
3,399
Gender
Undisclosed
HSC
2009
Uni Grad
2014
ok, so with the seven financial ratios, what are the ideal ratios for each one?

eg. with the current ratio, a ratio of 2:1 is considered ideal.

what about the rest of them?​
 

Eddykungfu

Member
Joined
Aug 17, 2008
Messages
322
Gender
Male
HSC
2009
Industry Standards (What to compare against IF they do not specify in stimulus

Solvency
Debt : Equity - 1:1 = Solvent. Anything higher is regarded High Risk, HIGH Geared and Insolvent

Liquidity
Current Ratio : Industry standard 2:1 (Unless given otherwise)


Efficiency Ratio:

Expenses - No "Industry Norm" But businesses will wish to keep this as low as possible.
Accounts receivable Turnover Ratio - 30 days unless given otherwise. (For collection)

Profitability... They'll probs give you the previous performance levels.
Return ON Owners Equity - 4% Bank interest account.
 
Last edited:

nimssyk

Captn
Joined
May 15, 2007
Messages
25
Location
Behind You
Gender
Male
HSC
2009
All im going to say is be very careful about using ideal ratios coz there all bs

unless the give u an industry average be careful of commenting on a figure becasue a lot of things quickly change what could be acceptable for a business

for example a Business A selling essential goods can take higher debt than a luxury good business becasue Business A will have more steady sales throughout the year

Eddy's prettymuch sport on with the 'ideal figures' but just make sure u justify why your using it, nad if possible dont use an ideal ratio unless they give you one.

Good luck Guys :)
 
Joined
Jan 26, 2009
Messages
270
Gender
Male
HSC
2009
Solvency
Debt : Equity - 1:1 = Solvent. Anything higher is regarded High Risk, HIGH Geared and Insolvent

Liquidity
Current Ratio : Industry standard 2:1 (Unless given otherwise)


Efficiency Ratio:

Expenses - No "Industry Norm" But businesses will wish to keep this as low as possible.
Accounts receivable Turnover Ratio - 30 days unless given otherwise. (For collection)

Profitability... They'll probs give you the previous performance levels.
Return ON Owners Equity - 4% Bank interest account.
For Debt: Equity, im pretty sure the ideal ratio is 0.6-0.8:1
 

Users Who Are Viewing This Thread (Users: 0, Guests: 1)

Top