Gary Lenzo, Las Cruces Market President, Century Bank
Operating a successful business requires attention to numbers — especially to basic financial ratios derived from the business’s financial statements.
The current and quick ratios calculate a company’s liquidity, while the debt ratio evaluates its long-term solvency. The gross profit margin shows if sales revenue covers the expenses incurred in making those sales.
Lenders and investors use business health assessments like these to determine if a company qualifies for a loan or is a good candidate for venture capital. Business owners should use them to regularly evaluate their business’s financial standing.
