Financial projections | Business & Finance homework help
In order to monitor the financial situation during this time period, it is helpful to analyze certain reports or ratios. A common ratio used in financial analysis is the liquidity ratio which measures a company’s ability to pay off its short-term obligations such as debts and bills. It is calculated by dividing the total current assets by total current liabilities. Additionally, monitoring debt ratios can provide insight into how much of a company’s resources are being directed towards outstanding liabilities versus equity financing options like stock issuance or retained earnings. Furthermore, evaluating profitability ratios such as return on assets (ROA) or operating profit margin (OPM) will help determine if profits are growing over time and reaching acceptable levels of performance expectations based on industry standards. Lastly, analyzing capital structure involves looking at different sources of funding such as debt versus equity financing and assessing what activities need capital investment for potential growth opportunities down the road.
These reports and ratios will give stakeholders visibility into the overall financial situation allowing them make informed decisions about supplier management and capital budgeting in order to ensure future success during these uncertain times ahead.