Home Categories Financial Ratios The accounting equation is considered the basis of the double-entry bookkeeping system. Accounting ratios, an important subset of financial ratios, are a group of metrics used to measure a company’s performance and profitability based on its financial statements. The acid test, or quick ratio, compares a company’s shortest-term assets to its shortest-term liabilities to see if the company has enough cash to pay off its immediate liabilities, such as short-term debt. Activity Ratio broadly describes any type of financial measure that helps investors and analysts evaluate how effectively a company is using its assets to generate revenue and cash. The Altman Z-Score is a formula for determining whether a company, especially in manufacturing, is approaching bankruptcy. APY is the actual rate of return that will be received in a year if interest is accrued. Asset coverage ratio is a financial measure that measures how well a company can pay off its debts by selling or liquidating its assets. Asset turnover is the ratio of total sales or revenue to average assets. There are several methods for calculating the value of a company. The Comparative Annual Growth Rate (AAGR) is the average annual return on an investment, portfolio, asset, or cash flow over time.