In 100 words or more reply to the statement below about financial ratios

• Financial ratios can tell us many things about a company. They can tell us about a company’s profitability, debt, and inventory. Examples of profitability ratios are earning per share, gross profit margin, operating margin, and return on sale. These ratios are used to express a company’s ability to generate earning. Debt ratios compare a company’s debt to assets and provides creditors with an idea of how much risk there is in lending to the company. Examples of debt ratios include debt ratio and debt to equity. Lastly, inventory ratios can be used to measure business performance. Some inventory ratios include inventory turnover, inventory write off, average inventory, and holding cost.