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Financial Ratios

Terms in this set (4)

Net profit margin

Net profit margin is the percentage of revenue left after all expenses have been deducted from sales. The measurement reveals the amount of profit that a business can extract from its total sales.

net income/sales

Return on Equity

Net income / avg owners equity

ROE is considered a measure of how effectively management is using a company's assets to create profits.

Total Debt/Total Equity

current assets divided by current liabilities

The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations.

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