The dollar amount of change from year to year is significant, and expressing the change in percentage terms adds perspective. The dollar amount of any…

One technique in financial statement analysis is known as vertical analysis. Vertical analysis results in common-size financial statements. A common-size balance sheet is a balance…

In order to assess how your business is doing, you’ll need more than single numbers extracted from the financial statements. Each number has to be…

Liquidity ratios are probably the most commonly used of all the business ratios. Your creditors may often be particularly interested in these because they show…

The quick ratio, also known as the acid test, serves a function that is quite similar to that of the current ratio. The difference between…

As a business owner/manager, you’re concerned with making the best use of your assets and being a low-cost producer in your industry. You can determine…

Inventory is the amount of merchandise, parts, supplies, or other goods your business keeps on hand to meet the demands of your customers. Depending on…

Accounts receivable represent sales for which payment has not yet been collected. If your business normally extends credit to its customers, the payment of accounts…

Fixed asset turnover is the ratio of sales (on your income statement) to the value of your fixed assets (on your balance sheet). It indicates…

The ratio of total sales (on your income statement) to total assets (on your balance sheet) indicates how well you’re using all your business assets…