Cash Ratio
The cash ratio is a much more effective tool for small business than the traditional current or quick ratio.
Accounts Receivable Turnover Ratio
One of the activity ratios in business is the receivables turnover ratio or rate; it measures the frequency of collecting the entire balance of accounts receivable.
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Net Profit
No other business term is so misunderstood, misstated, misleading or deceiving as the words ‘net profit’.
Current Ratio
The current ratio is an inappropriate relationship to use or rely on in small business. The ratio is best suited for large publicly traded organizations.
Business Ratios (Introduction)
Business ratios are used to compare companies of different sizes within the same industry.
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Economies of Scale (Lesson 24)
Of the basic business principles, economies of scale has the greatest impact on profitability over any other business principle. As an enterprise’s investment is spread over higher volume the cost per unit of production decreases.
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Interest Coverage Ratio
The last of the leverage ratios isn’t really a pure leverage indicator but augments the debt ratio. This is the interest coverage ratio.
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Gross Profit Margin
The difference between the sales price and the cost of the product or service rendered is known as gross profit margin.
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Debt to Equity Ratio
A leverage ratio used to evaluate the financial integrity of a business is the debt to equity ratio. It is strictly a bottom half balance sheet ratio.
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Net Profit Margin
The net profit margin reflects the profitability of the company as a percentage of net sales. It is one of the performance ratios used in evaluating business.