Financial Strength Ratios
Understanding financial strength is very important for investors because it reflects the true value and stability of a company.
Why Financial Strength Ratios?
A company's financial position is defined by its assets and liabilities. Financial strength ratios help investors determine if a company has enough resources to meet its obligations and weather economic downturns.
Key Financial Strength Ratios
Current Ratio
Measures a company's ability to pay short-term obligations or those due within one year.
Quick Ratio
An indicator of a company's short-term liquidity position using only its most liquid assets.
Total Debt to Equity Ratio
A measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.
Book Value
The net value of a company's assets found on its balance sheet.
Book Value Per Share
The ratio of equity available to common shareholders divided by the number of outstanding shares.
Price to Book Value Ratio
Compares a company's market value to its book value.