Financial ratios: liquidity, profitability and stability

What this note covers

1. Why ratio analysis matters and how liquidity is measured
2. Profitability ratios: gross profit, profit and expense
3. Return on equity ratio
4. Stability: debt to equity ratio
5. Interpreting ratios together and common pitfalls
6. Worked example: calculating and interpreting a small ratio set
7. How this topic is examined and what separates a top response

7 sections · 10 key terms & formulas · 6 common mistakes