Interpretation As the above explanations and examples explain very clearly, a high ratio is the result of high amount of debt which is beneficial but at the same time risky for the company since a large part of the revenue and profit will be used to pay interest. Thus if it is not able...
Asset Turnover Ratio Formula = Sales / Average Assets There are a few things you should know before we can go to the interpretation of the ratio. First, what do we mean by Sales or Net sales, and what figure would we take to calculate the ratio? What are total assets, and would we...
Analyst should also be careful to not to over interpret a single ratio. One should look at a whole array offinancial ratiosto get a clearer picture of the financial health of a company. Most relevant ratios in this case could bedebt service ratio, LT debt ratio,Debt/Equity ratioetc. In ...
As we are analyzing a Utilities company, this ratio would have had to have been over 1.5 to be acceptable to investors. Interpretation & Analysis When assessing a company's financial stability, one important financial metric to consider is the asset coverage ratio. ...
Calculation of asset coverage ratio Interpretation Important Considerations Conclusion The higher the asset coverage ratio, the better it is for the Company and its stakeholders. The higher ratio denotes a company has more assets than its debt obligations. Therefore, it will be less risky to invest...
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Analysis and Interpretation Typically, a LT debt ratio of less than 0.5 is considered good or healthy. It’s important to analyze all ratios in the context of the company’s industry averages and its past. For capital intensive industry the ratio might be higher while for IT software companie...
SomeDigital Asset Transactionsmay be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the Client initiates or completes the Transactions on the LGO Platform. U.S. Dep’t of the Treasury Press Release, The Financial Crimes Enforcement Network ...
the asset turnover ratio measures how efficiently the company is expanding over time; especially compared to the rest of the market. Although a company's total revenue may be increasing, the asset turnover ratio can identify whether that company is becoming...
CAPM does this by using the expected return on both the market and a risk-free asset, and the asset’s correlation or sensitivity to the market (beta). There are some limitations to the CAPM, such as making unrealistic assumptions and relying on a linear interpretation of risk vs. return....