Question

Q4. (25 marks) Imagine you are planning to raise capital for the firm, you are wary about the lender and shareholders, which accounting ratios could address the concerns of those stakeholders? Explain in detail.

Answer 1

Gerecated from It measure the perceritage netwo to equüty shareholdere Return on Equity profit y Reference/ Alte taxeij - Dividend Equity shareholder fund 100 Debt egeaty Ratio : The ratio indicates the proportion of debt fund in relation to Equity. It is very efter seferred to Capital Structure decinen well as in the registation dealing with the capital structure dealings. It as the indicator of firm's financial leverage Dekt Equity Ratio Long term dest Shareholden funds (equity)

withdraw cach & reinvest in elewhere. It is the of the best known Solutions Current Ratio: It is the one measures of financial Strength. most common measure of short term liquidity. Current ratio u Satisfactory depends on the nature of the business and the characteristics of at current assets and liabilater. Generally accepted Ratio is a 1 Corrent Ratio Current Assets Current liabiliter Return on Equity: (Roe): ft is one of the most important indicators of a firm's profitability and potential growth companies that boost a high Roe with little or able to grow without large capital expenditures, allows the owners to no debt The ratio reveals the owner's funds have been citilised by the poofitability of