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Which Ratios Should My Business Track?

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Whew! That’s a lot of numbers! You are probably wondering if you need to track them all on an ongoing basis. Of course not. Some ratios will be more applicable to certain businesses and certain industries than others. For example, if you provide a service instead of a product, the inventory turnover and return on assets may not be relevant to you, but the receivables turnover may be critical to the efficient operation of your business.

Choose the most important four or five ratios for your business and track those as part of your monthly management operating plan.

Financial Management 101

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