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Financial Structure Ratios To Be Used In Balance Sheet Analysis
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Always act consciously when investing comes across as the first rule of not losing. In order to make informed investments, it is necessary to have information about some issues. The first of these, Of course, will be to filter out a wide range of information such as the sector in which the company is located, the subsidiaries of the company, the investments made by the company, which can also be described as basic analysis. Then, if you want to invest in the company by buying stock, technical analysis of the stock will be done and information about the support and resistance points will be obtained.

The importance of basic analysis and technical analysis is certain, but another of the golden rules of conscious investment is balance sheet analysis. In this article, we will briefly talk about how the ratios that you can use to analyze the balance sheet of companies are calculated and what these ratios can show us about the company.

Financial Leverage Ratio

Financial leverage ratio is the ratio that indicates how much of a company's assets are financed by foreign sources. Although it varies from company to company and sector to sector, according to analysts, this rate is generally considered positive to be 50%. Of course, in order to evaluate the resulting rate in a healthy way, comparisons must be made according to the sector averages in which the company is located.

The ratio of financial leverage is the ratio of total foreign assets (short-term foreign liabilities + long-term foreign liabilities) in the balance sheet divided by the total balance sheet (assets or liabilities).

Funding Ratio

The financing ratio is the ratio that shows how much of the company's own resources cover the total foreign resources. The high level of company equity is generally considered positive. According to analysts, the level of financing at 50% is considered positive. However, for healthy evaluations, it is absolutely necessary to make comparisons according to the sector averages.
The financing ratio is found by dividing the company's equity into total foreign resources (long-term foreign resources + short-term foreign resources).
Financing Ratio = Total Equity / Total Foreign Resources

Autophinance Ratio

Another ratio that shows the financial structure of the company is the auto financing ratio. The auto financing ratio is important to show the degree to which companies can finance themselves.
The auto finance ratio is determined by dividing the amount of the company's paid-in capital after subtracting the previous year's losses from the profit reserves in the balance sheet.
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