FINANCIAL RATIOS 1 PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 15. FINANCIAL RATIOS 1

 

A Types of financial ratio Financial ratios express the relationships between two or more items on financial statements. They allow investors and creditors to compare a company’s present situation and performance with its past performance, and other companies. Ratios measure: B Liquidity and solvency rations This is the current ratio, which is a calculation of current assets divided by current liabilities. It measures liquidity and shows how much of a company’s assets will have to be converted into cash in the C Earnings and dividends Shareholders are interested in ratios relating to a company’s share price, earnings, and dividend payments.   EXERCISES 15.1 Find words in A opposite with the following meanings. 1 the ability to sell an asset for cash 2 how well a business uses its assets 15.2 Make word combinations using a word from each box. One word can be used twice. Then use the word combinations to complete the sentences below. Look at B and C opposite to help you. 1 ________________ ________________ consist of cash and things that can be easily sold and converted to cash. 2 A high ________________ ________________ shows that the company is retaining a lot of money belonging to its shareholders. 15.3 Match the two parts of the sentences. Look at B and C opposite to help you. 1 If a company pays out retained surpluses from past years 2 Some investors are worried that the new stock issue

ANSWER KEY