After reading through Chapter 2 on Ratio Analysis (Learning Objective 2), Create your own Thread...
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Accounting
After reading through Chapter 2 on Ratio Analysis (Learning Objective 2), Create your own Thread and post a response to the following:
Choose one of the 3 main types of ratios (liquidity, solvency, or profitability) and give the definition. (see Illustration 2.9)
Give an example of how it is measured and calculated (ratio or formula).
Explain why a bank would utilize this ratio when deciding whether they should loan money to a business. Give an example.
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