How to Understand Your Financial Statements
Financial Statements are important tools to recognize the performance of a company. Income statement, Balance Sheet and Cash Flow Statement are three official financial statements that are common to see. They not only present accounts balance and your profit or loss but also reflect some deeper information such as the profitability of a company. However, deep information does not show up itself. In order to make a further analysis of a business, you need to do some calculation and comparison to get some ratios. 1.Current Ratio=Current assets\Current liability Current ratio is used to measure the liquidity of a company. It reflects the short-term debt-paying liability by comparing the value of current assets and current liabilities. For example, the current ratio for Tim Hortons INC. In 2014 is 1.155 to 1 , which means Tim Hortons has $1.16 of current assets for every dollar of current liabilities. While the c...