Pick a company's financial statement, if you were an investor suggest the ratios you believe would provide you with the most important information needed to make accurate predictions about the company's financial condition and explain.
Financial leverage ratios (debt ratios) measure the
ability of a company to meet its financial obligations when they fall
due. Financial leverage ratios (debt ratios) indicate the ability of a
company to repay principal amount of its debts, pay interest on its
borrowings, and to meet its other financial obligations. They also give
insights into the mix of equity and debt a company is using.
Financial leverage ratios usually compare the debts of a company to
its assets. The common examples of financial leverage ratios include
debt ratio, interest coverage ratio, capitalization ratio,
debt-to-equity ratio, and fixet assets to net worth ratio.
Financial leverage ratios indicate the short-term and long-term
solvency of a company. They give indications about the financial health
of a company. These ratios give indications whether the company has got
enough financial resources to cover its financial obligations when the
creditors and lenders seek their payments.