Principles of finance

Week 2 Discussion

Please respond to one of the following questions:

Question A

Investors and creditors are typically not interested in the same thing. Investors are typically interested in whether a company is going to turn a profit over time, while a creditor is interested in short-term cash flow. Decide whether you are an investor or creditor. Choose two ratios for the type of external user you chose and discuss its importance in analyzing a company.

Question B 

When reviewing the financial statements of a company, there are many different ratios to choose from. Choose a ratio that looks at liquidity, solvency and profitability and discuss its importance.