The new CFO e-mails you, asking for your help this week analyzing some competitors financial statements. Knowing that there are over 20 different ratios that can be used to monitor and assess the financial health of a company, he wants to know which 5 ratios you would start with, why, what they mean, and to whom.
Reply to him in an e-mail of 500600 words that includes the following:
- Which 5 ratios do you feel are the best monitors of the health of a company, and why?
- For each of the 5 ratios you chose, in laymans terms:
- Explain the meaning of each ratio. (What information does it provide?)
- Do companies want the ratio to be a higher or a lower figure? Why?
- Which stakeholder(s) will be more interested in the ratios? Why?