Key Terms

  • Liquidity. The firm’s ability to meet its short-term financial obligations.
  • Solvency. The extent to which the firm is able to pay interest and repay long-term loans as and when they are due.
  • Financial leverage. The extent to which the firm is ­employing long-term debt and what is the degree of financial risk of the firm?
  • Gross profit. The amount of profit left over from revenues after accounting for the cost of goods sold.
  • Operating profit (EBIT). The amount of profit that a firm is able to generate after paying its office and selling expenses.
  • Financial management. It is the process of procurement and allocation of funds and distribution of profits among shareholders.
  • Capex. The investment in fixed assets is called as capital expenditure. ...

Get Financial Ratios now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.