Key financial ratios, growth rates, and rates of return - General ratios

5 important questions on Key financial ratios, growth rates, and rates of return - General ratios

Why are ratios the most flexible calculations of all?

As different businesses have their own frequently used ratios to compare one with the other and to be able to make a judgment about management effectiveness, cost control, pricing, value-add, various conversions of one item into another, etc.

How is any not collected sales price a risk to the business?

As the counterparty may become insolvent in the meantime.

What does this net-debt-to-EBITDA measure?

How many years a business would need to fully repay its debt with its own operating cashflow.
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What does the interest rate show?

It shows how much room the operating profitability of a business has to take on other costs besides financing costs.

What is the formula of days sales outstanding (DSO)?

Accounts receivable / revenues * 365

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