After reading the textbook on ratios, and doing a little research, you should have a basic knowledge of how a ratio is used both personally and professionally. If you have ever applied for a credit card or a loan, you have had your credit profile reviewed and you had to tell the organization how much money you made. They then used this information to perform a ratio to determine if you qualify for the loan. The lender wants to know if you can afford the loan.
This same principal is applied to businesses. The financial information can be obtained from a health care organization by reviewing their financial statements, which can tell a lender if the organization is making enough money to take on the debt associated with a loan.
With that said, financial institutions and investors utilize ratios to determine the financial viability of a business. Therefore, it is important for a manager to understand the use and calculation of ratios. In you initial response, include PART 1 and PART 2. Make sure your initial response is at least a 175- to 265-word count.
Based on the first initial of your last name, you will discuss one of the financial ratios listed below and explain why a financial institution or investor would use the ratio you chose. Include what the ratio results would tell you about the business.
In addition, give an example of how you would you use one of the financial ratios in your personal finances or current profession.
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