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3 Important Financial Indicators

Don’t be afraid of company metrics. Technical terms such as liquidity level, contribution margin and capital ratio often contain very simple calculations and meanings. The more confidently and confidently you can juggle such technical jargon in a meeting, the more competent you will be perceived by your boss and colleagues.

Control the company with key figures

Key figures provide condensed information about, for example, the financial structure of a company or productivity. Ultimately, there are key figures for every area in a company that help analyze and control it. The most important are those values ​​that provide information about the company’s financial situation. If a company gets into trouble in this area, it can quickly become a threat to its existence.

3 important financial indicators

You should know these terms:

Equity ratio = equity divided by total capital times 100

This number shows what the relationship between equity and total capital is. The higher the quota, the more independent the company is, for example. B. from banks. In individual sectors the value is between 15 and 30 percent.

Liquidity 1st degree = liquid assets divided by current liabilities times 100

Liquidity ratios show how quickly a company is able to pay its short-term liabilities. First degree liquidity should be between 5 and 10 percent.

Coverage ratio 1 = equity divided by fixed assets times 100

A company should finance long-term assets with long-term funds. The degree of coverage indicates the extent to which this occurs. Coverage level 1 should be between 80 and 100 percent.

Also Read: Tips for Optimizing Your Financial Transactions in the Internet Age

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