What are financial ratios definition and meaning

The division of one piece of financial information by another. Financial ratios are very common in fundamental analysis, which investigates the financial health of companies.

Financial Ratios are key indicators of the financial performance of the company and are usually derived from its three statements including income statement, balance sheet, and cash flows. These financial ratios help in analyzing the company’s profitability, liquidity, assumed risks as well as financial stability.

To calculate financial ration, numbers are taken from the balance sheet, income statement, and cash flow statement. The financial ratio is not a calculation but an explanation of the economic status of a company, in terms of profit, liquidity, leverage, and market valuation. A ratio may serve as an indicator, red flag or clue for various issues. What are financial ratios definition and meaningFinancial ratios are the main tools used in the analysis of financial statements. They measure and evaluate a company’s financial health, and are divided into three main categories:1. Return on equity (ROE) 2. Return on assets (RoA) 3. Return on investment (ROI)What is return on equity?Return on equity measures the profitability of a company. It is calculated as the net profit divided by the total equity.

What are financial ratios definition and meaning

Accounting ratios definition and meaning

Accounting ratios, also known as financial ratios, are used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another, and are the basis of ratio analysis.

Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company. The numbers found on a company’s financial statements – balance sheet

There are four types of Accounting Ratios with formulas This first type of accounting ratio formula is used for ascertaining the liquidity position of the company. It is used for determining the paying capacity of the company towards its short term liabilities. A high liquidity ratio indicates that the cash position of the company is good. Accounting ratios definition and meaningThe accounting ratio is a measurement of the company’s financial health. It is used to compare different companies’ financial performance in order to determine the strength of their financial health, which in turn helps investors decide if the company is worth investing in. Accounting ratios are used in the analysis of all companies, but there are some that are more important than others.

Accounting ratios definition and meaning

Job Satisfaction Hierarchy

Job satisfaction can be tricky to find. Many people feel that while they are generally happy with their employment, their job is missing certain aspects that would contribute to a more rewarding work experience.

Seven steps to complete job satisfaction have been identified and arranged in a hierarchy. Starting from the most basic job satisfaction attribute, each step in this hierarchy is a higherorder feature that, once achieved, contributes to greater employment satisfaction and happiness.

1. Having a job: A lot of people draw satisfaction, a sense of pride and security from having a job in the first place. The feeling is an important contributor to overall job satisfaction.

2. Being wellpaid: The importance of the monetary compensation for one’s work is twofold. First, in a very direct practical sense it influences the kind of lifestyle a person can afford to have. Second, it often acts as a measure of success.

3. Having job security: This is another quite basic aspect that means LACK of constant threat of being fired. If someone is working in a role, where better candidates are always available or the person lacks skills for, they would be under constant threat of being fired. Working under such stress could seriously affect job satisfaction. Having job security would mean that the person has most of the necessary skills and attributes for the position and his or her superiors are not looking for replacement.

4. Enjoying the work/people/process: This is a transition step from basic to more higherorder attributes of job satisfaction. Once Step 1,2 and 3 have been fulfilled, the job content becomes important. What one does on the daily basis, as well as the kind people and processes one works with can greatly affect one’s job satisfaction.

5. Utilizing your potential/feeling needed/delivering value: Even higherorder job satisfaction components come from within the person. These aspects are highly subjective and stem from the interaction between the worker’s talents, life experiences and ambitions with the nature of his or her job. For instance, if a person feels that they are highly capable in a certain area, but work in another, they might feel that their abilities are being underutilized. In the same way, if the person does not feel that their work is needed or that they are delivering value, he or she will not be completely satisfied with their job.

6. Experiencing growth/selfimprovement: Personal growth and selfimprovement can be a nice bonus in any life experience. However, it is especially valuable in the workplace where a person typically spends a lot of time on the daily basis. If a person feels he or she is learning and improving in their field, as opposed to doing monotonous work, they will likely feel more satisfied about their job.

7. Finding ultimate meaning: This final step is probably the most difficult to achieve. The sense of ultimate meaning at work comes as a result of a match between one’s values, life experiences and goals with aspects of one’s job. This match can happen via different scenarios. For instance, a person who believes in saving the environment works for an environmental protection association and feels that his or her everyday contribution furthers the goal of the association. In another example, a heart surgeon or a fire fighter would derive meaning by saving peoples’ lives.

Whatever the scenario, finding ultimate meaning in one’s job would greatly contribute to workplace satisfaction. At the same time, it is important to recognize that other steps are also crucial and no step by itself can replace the satisfaction missing if some of the steps are unfulfilled.

Job Satisfaction Chart