What´s Ratio Analysis?

The purpose of the company's health ratio analysis is to determine the company's financial strengths and weaknesses by measuring the company's liquidity, leverage, activity and profitability. There are several advantages to using ratio analysis and disadvantages. The disadvantage is that it is impossible to compare companies in different industries, accounting information affects estimates and assumptions, so there is room for miscalculation. The advantage of using ratios is to quickly and easily emphasize important information so that company trend analysis can be compared over time.

Ratio analysis includes liquidity ratio, profitability and leverage ratio. Through analysis of each ratio, analysts can fully assess the ability to identify important information, assess repayment capacity of short-term borrowings, determine profitability, and solvency risk. The largest change in Merck 's liquidity ratio was from 2014 to 2015, and the current ratio decreased from 77 to 55 due to the increase in total current assets, more specifically the decrease in total inventory (Table 3b). The biggest change in the cash ratio is between 2013 and 2014, and the purchase of Cubist Pharmaceuticals reduced the cash ratio from 0.87 to 0.40 (Loftus, 2014).

Last year, a new research on the analysis of the ratio of cryptology economics appeared. The main idea behind this new field is to study the relationship between the price of the encryption set and its fundamental. One of the most widely known ratios is Network Value to Transactions or NVT. NVTs introduced and recommended by teams behind Chris Burniske, Willy Woo, and Coinmetrics are often referred to as "encrypted PE ratios". Below is the definition of ratio. In the traditional P / E ratio, the denominator income indicator is used as the basic utility of the company created for shareholders. There is no income for cryptographic assets, but the total value of transactions flowing over the network represents the number of utility users acquired from the chain. It is worth emphasizing that NVT 's daily trading volume considers only online transactions.

In traditional finance, ratio analysis is one of the most widely used evaluation methods. Due to the lack of details of other valuation methods such as DCF analysis, the ratio-based valuation is much faster and maintains a better representation of fair value. You can also easily track asset price fluctuations over time and compare various assets to each other. Last year, a new study on the analysis of the ratio of cryptology economics emerged. The main idea behind this new field is to study the relationship between the price of the encryption set and its fundamental. One of the most widely known ratios is Network Value to Transactions or NVT. NVTs introduced and recommended by teams behind Chris Burniske, Willy Woo, and Coinmetrics are often referred to as "encrypted PE ratios". This is the definition of the ratio.