Question

Name 3 ratios that an investor would be particularly interested it and explain why you think that ratio would be important to them.

Answer 1

Ratios that an investor would be particularly interested in are

• P/E Ratio
• Debt equity ratio
• Interest coverage ratio
• assets turnover ratio

P/E ratio : It is used as a quick way to determine how "cheap" or "expensive" the stock is.

Debt equity ratio : Investors like to compare the total equity (net worth) of a company to its debt obligations.

Interest coverage ratio : It lets you know how much money is available to cover all of the interest expense a company incurs on the money it owes each year.

assets turnover ratio : It measures a company's efficiency in using its assets.