Chapter 4

Ratios Every Business Should Monitor

Abstract

Veteran lenders can scan your firm’s financial statement and know, in a matter of minutes, whether you have hit the can you pay, will you pay bull’s-eye. The truth is – lenders do not in fact pore over financial statements until their credit support teams produce ratios. So if you were hoping for a seamless trip through the loan process, be patient. Ratios form the structure of fundamental analysis, and establish the basis of preliminary loan discussions, so prudent lenders will likely defer further discussion until they have had a chance to review your firm’s ratios. Before you meet with your lender, learn what ratios are all about, what they say about your business, and how to make ...

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