Respond to the following:
Analysts use these ratios in three primary categories to analyze financial statements:
- Liquidity Ratios.
- Activity Ratios.
- Profitability Ratios.
Financial analysts tend to use one or two of these categories to analyze a company’s financial position.
Imagine that you are a financial analyst:
- Select at least one ratio from each category.
- Describe what these ratios reveal about a company’s financial health.
- Explain how you could use the ratio information to determine ways to improve a company’s financial health.
- Explain which external user might be most interested in the ratio information and how they might use the information to make decisions
