Business Finance
Propose a Strategy to Accurately Predict the Company's Financial Condition

Question Description

 Putting yourself in the role of an investor or creditor, suggest the ratios that you believe would provide you with the most important information needed to make accurate predictions about the company’s financial condition. Provide a rationale.

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Final Answer

The Creditors and investors study the financial statements content and determine several varieties of financial measures before they make and investing and creditdecisions, because they think that financial indicators have prognostic control.

  Accounting ratios offer valuable information in quantitative form to analyst and investors who want to assess the firm’s operation and its physical position inside industry over time. These are employed for following purposes:

·  Point to the process of organizational turnaround

·  Distinguish creditworthy firms from others

·  Recognizing target of acquisition

·  To value firms

  Generally firm like commercial banks need to employ accounting ratios to evaluate their performance mainly liquidity position.


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