Financial Ratios Based on the Balance Sheet

Financial statement analysis includes financial ratios. Here are three financial ratios that are based solely on current asset and current liability amounts appearing on a company's balance sheet:

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Four financial ratios relate balance sheet amounts for Accounts Receivable and Inventory to income statement amounts. To illustrate these financial ratios we will use the following income statement information:

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To learn more about the income statement, go to:

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The next financial ratio involves the relationship between two amounts from the balance sheet: total liabilities and total stockholders' equity:

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