Some key performance indicators

As promised, it is time now to run through some key ratios and other relationships. Others are discussed in the next chapter. As you read the following paragraphs, remember the warnings about the problems with comparing competitors.

Liquidity

You will be well aware by now that profit does not equate directly to cash in the bank. There are no better measures of liquidity than detailed cash flow projections. Unfortunately, these are not going to be made available in the published statements of your competitors and other companies of interest. As an alternative, liquidity ratios can be used as an, albeit historical, indication whether the business is likely to be able to meet its future financial obligations as they ...

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