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In-depth understanding of Important Financial Formula and Ratios Twitter: shuchi_nahar What are Financial Ratios? Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company. The numbers found on a company’s financial statements – balance sheet, income statement, and cash flow statement – are used to perform quantitatively analysis and assess a company’s liquidity, leverage, growth, margins, profitability, rates of return, valuation, and more. Return on Assets (ROA) ROA tells an investor how much Profit or Return a company generated for each Rupee of Assets. The formula for Return on Assets ROA = Earnings/Assets Alternatively, this can also be expressed as ROA = (Earnings/Sales) x (Sales/Assets), or Formula Dissection ROA = Net Margin x Asset Turnover The first component of Return on Assets is simply Net Margin or Net Income divided by Sales. It tells us how much of each Rupee of Sa

Financial Shenanigans to be traced over the years (Part-1) Link for Part-2: https://myweekendspot.blogspot.com/2020/01/checklist-to-understand-recording-of.html Link for Part-3: https://myweekendspot.blogspot.com/2020/01/understanding-details-of-cashflow.html Follow for more updates:  @ shuchi_nahar While most companies act ethically and follow prescribed accounting rules when reporting their financial performance, some take advantage of gray areas in the rules (or worse, ignore the rules altogether) in order to portray their financial results in a misleadingly positive way. Management’s desire to put a positive spin on financial results has been around as long as corporations and investors themselves. Dishonest companies have long used these tricks to prey on unsuspecting investors, and it is unlikely that they will ever cease to do so. The lure of accounting gimmickry is particularly strong at companies that are struggling to keep up with their investors’ expectations or