Evaluating financial risk with options

Oct 12th, 2015
HelloWorld
Category:
Accounting
Price: $15 USD

Question description

Assume that all you have available are data for the following ratios and your firm and your industry.

Total Asset Turnover = Revenues/Assets
Total Margin = EBIT/Revenues
Net Profit Margin = Earnings/Revenues
Times Interest Earned  = EBIT/Interest
Return on Equity   = Earnings/Equity

If you want to evaluate the financial risk of your company and you can only use one of the measures, which one would it be and why?


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