How can you measure how well a company is doing? Is it being well managed? Where can it improve? The answer to all these question lies in a deeper understanding of what the balance sheet, cash flow and income statement can tell us and learning to compare the right metrics. In this lesson you'll learn: • What financial ratios are and why they're important • Management ratios: Price to book • Investment ratios: ROA, ROC and ROE
Your management team gets presented with an investment opportunity. You can purchase bonds with a 7% return or use invest in a new factory. Which ratio should you use to see which option to choose?