FINANCIAL RATIOS 2 PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 16. FINANCIAL RATIOS 2

 

A Profitability There are various profitability ratios that allow investors to compare a company’s profit with its sales, its assets or its capital. Financial analysts usually include them in their reports on companies. B Leverage This is gearing or leverage, often expressed as a percentage. It shows how for a company is funded by loans rather than its own capital. A highly geared or highly leveraged company is one that has a lot of debt compared to equity.   EXERCISES 16.1 Match the two parts of the sentences. Look at A and B opposite to help you. 1 After borrowing millions to finance the takeover of a rival firm, the company’s 2 Although sales fell 5% the company’s   16.2 Read the text and answer the questions below. You may need to look at Units 11-14 Predicting insolvency: the Altman Z-Score The Z-Score was created by Edward Altman in the 1960s. it combines a set of 5 financial ratios and a weighting system to predict a company’s probability of failure using 8 variables from its financial statements.

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