How to Calculate Financial Ratios

Video Transcript

"Hi I'm Spence and this is Jeannine, we are with Account Team in Salt Lake City. And we help people with their books and help them to fill out papers for loans and do things that are necessary for their taxes. Today I'd like to talk to you about some financial ratios. Most small businesses have to go to a bank to qualify for a loan. And the banker is going to look at some financial ratios to see if he wants to work with you. Some common ones are assets to liabilities, how much you own compared to how much you owe other people would be important to him. Another amount is how much money you are asking him to give you compared to how much money yourself will put in. Not only banks but venture capital firms many times will not put money in unless the person asking for the money has put in a substantial amount of their own so they are taking some of the risk also."