What is a short term creditor interested in?
Short-term creditors are most interested in liquidity ratios because they provide the best information on the cash flow of a company and measure its ability to pay its current liabilities or the money a company owes to its creditors.
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What is a short term creditor?
Short-term creditors are primarily concerned with a company’s ability to meet short-term debt from current assets, so they concentrate on the liquidity ratio emphasizing cash flow. Auditors zero in on the going concern of the client by determining its ability to meet debt (e.g., interest coverage ratio).
What are shareholders most interested in evaluating?
profitability and solvency. Stockholders are most interested in evaluating a. liquidity and solvency.
Is it better to have a high or low return on assets?
Return on assets (ROA), in basic terms, tells you what earnings were generated from invested capital (assets). The higher the ROA number, the better, because the company is earning more money on less investment.
What causes a decrease in return on assets?
An ROA that rises over time indicates the company is doing a good job of increasing its profits with each investment dollar it spends. A falling ROA indicates the company might have over-invested in assets that have failed to produce revenue growth, a sign the company may be trouble….
What is a bad return on assets?
A low ROA indicates that the company is not able to make maximum use of its assets for getting more profits. If you want to increase the ROA then you must try to increase the profit margin or you must try to make maximum use of the company assets to increase sales. A higher ratio is always better….
What is a low return on assets?
A low percentage return on assets indicates that the company is not making enough income from the use of its assets. The machinery may not be increasing production efficiency or lowering overall production costs enough to positively impact the company’s profit margin….
How do you increase assets?
6 Simple Ways to Increase Your Net WorthReview Your Liabilities and Pay off Debt. This is one of the simplest ways to raise your net worth. Review and Increase Your Assets. Reduce Expenses. Find New Sources of Income. Maximize Retirement Contributions. Store Your Money Where It Can Grow.
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Is it better to have a higher profit margin?
A higher profit margin is always desirable since it means the company generates more profits from its sales. However, profit margins can vary by industry. Growth companies might have a higher profit margin than retail companies, but retailers make up for their lower profit margins with higher sales volumes.