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Ratio Analysis - Mind Map

Mind Maps have been produced to introduce topics and give students an overview of key topics being studied. The maps can be viewed as a whole page or, for those who prefer a more linear approach, as a text version.
  • Liquidity
    • How solvent is the business?
    • Acid Test
      • Quick ratio
      • Current assets - stock : liabilities
      • 1:1 seen as ideal
    • Current Ratio
      • Assets to Liabilities
      • Too high - too much stock
      • Too low - risk of not being able to pay your way
  • Investment/Shareholders
    • Earnings per share
    • Dividend Yield
    • What is the extent of the risk?
    • What is the likely return?
    • Generally - higher the better
  • Gearing
    • Financial position
    • Loans/Capital
    • High gearing - Loans > Capital
  • Profitability
    • Profit in relation to sales/assets
    • Profit Margins
    • Return on Capital
    • Higher the better (in general)
  • Financial
    • Asset Turnover
      • Using assets to generate profit
    • Stock Turnover
      • Increased efficiency?
      • Poor customer satisfaction?
    • Debtor Days
      • Shorter the better

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