Learning Goals : By Completing This lecture, you should be able to know



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profitability and market
Lecture 2 Risk And Return - part 1 october 15 (3), lec 2

Financial Management
Dr : Samira Allam
Chapter two
Financial Ratios
Profitability & Market Ratios
  • Learning Goals :

  • By Completing This lecture, you should be able to KNOW :
  • The meaning of each of the Financial Ratios ( Profitability , Market ) Ratios
  • How to Calculate and interpret each of these ratios .





  • Financial Ratios :

  • Can be divided into these Ratios :
        • Activity or efficiency Ratios .
        • Liquidity Ratios .
        • Solvency Ratios .
        • Profitability Ratios .
        • Valuation or Market Ratios .










Goals :

Financial ratios can be segregated into different classifications by the type of information about the company they provide. One such classification scheme is:
  • Liquidity ratios: Liquidity here refers to the ability to pay short-term obligations as they come due.
  • Solvency ratios: Solvency ratios give the analyst information on the firm's financial leverage and ability to meet its long-term obligations.
  • Profitability ratios : Profitability ratios provide information on how well the company generates operating profits and net profits from its sales.




4- Valuation Or Market ratios earnings per share, and price to cash flow per share are examples of ratios used in comparing the relative valuation of companies.



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