ACCCB543_Comp1_Mod1_Reflection.doc Comp 1/Module 1 - Reflection University of Phoenix ACCCB/543: Managerial Accounting and Legal Aspects of Business Comp 1/Module 1 “ Reflection Users of financial data have a mult
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ACCCB543_Comp1_Mod1_Reflection.doc Comp 1/Module 1 - Reflection University of Phoenix ACCCB/543: Managerial Accounting and Legal Aspects of Business Comp 1/Module 1 “ Reflection Users of financial data have a multitude of methods to analyze the information and make managerial decisions based on the findings. Considering that no two organizations are the same it is common for financial data users to view the information in the form of ratios to compare sets of specific data. This allows for a better comparison in many cases of two companies with different sizes, industries, structures, or geographies. There are three main categories that these ratios fall into: measures of debt-paying ability, measures of profitability, and stock market ratios. Each of these categories may be used for various reasons depending on the user and level of interest in the organization. Debt-Paying Ability Ratios that measure an organizations debt paying ability can be separated into those comparing long-term debt and short-term debt. Ratios that measure short-term debt-paying ability are referred to as liquidity ratios and those measuring long-term are referred to as solvency ratios. The purpose is to evaluate a companys ability to satisfy debt by comparing assets, liabilities, and equity. An example of a common liquidity ratio is a current ratio. Current ratio is calculated by dividing the current assets by current liabilities and displayed as a ratio of current assets in dollars to one dollar of current liabilities. Al. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . .. . . . .
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