Question: write a personal reply to my classmate Ashleigh's initial post: 3 ratios used for analysis are current ratio, debt-to-equity ratio, and inventory turnover ratio. Current
write a personal reply to my classmate Ashleigh's initial post: 3 ratios used for analysis are current ratio, debt-to-equity ratio, and inventory turnover ratio. Current ratio is also known as liquidity and is used to measure a company's ability to meet short- term financial obligations with the assets available. Having a higher current ratio shows strong liquidity, which should allow the company ability to pay off immediate debts, this is important for internal managers and external investors in assessing short term financial stability. Debt-to-equity ratio is used to reveal the proportion of a company's funding that comes from debt compared to equity. Having a high debt-to-equity ratio might suggest the company relies heavy on debt financing and can be a potential impact to long-term solvency. This is important for both internal managers and external investors making decisions. Lastly, inventory turnover is used to indicate how effective a company manages its inventory. High inventory turnover suggests effective inventory management and reduced storage costs, this is valuable information for internal operations when trying to optimize inventory. When it comes to financial ratios alone, they are not enough to make internal and external decisions related to the company. These values provide a quantitative
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