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financial ratios

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* Links * Links
- [[./../mba-main.org][<Back to Main MBA]] - [[./../mba-main.org][<Back to Main MBA]]
- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4311526#overview][S06:L34 Income Statement, Balance Sheet, Financial Risk]] - [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4282978#overview][S06:L36 Financial Ratios]]
- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4311576#overview][S06:L35 Cash Flow Statement]]
* Notes * Notes
** Liquidity Ratios
*** basics
- also called "Liquidity"
- measure our ability to pay short term debt
- get a loan
*** Current Ratio
- \( \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \).
- if it is positive, then the banks think you can pay your bills
*** quick ratio
- \( \text{Quick Ratio} = \frac{\text{Current Ratio} - \text{inventory}}{\text{Current Liabilities}}\)
- used in case the inventory has to be discounted (ie the inventory just got recalled)
** Leverage Ratios
- Debt to total assets = debt / assets
- Interest coverage = EBITDA / interest
- Earnings Before Interest Taxes Depreciation and Amoritization