f you have ever applied for a credit card or a loan, you have had your credit profile reviewed and you had to give information to the lender about your income and expenses. The lender used this inform

f you have ever applied for a credit card or a loan, you have had your credit profile reviewed and you had to give information to the lender about your income and expenses. The lender used this information to perform a ratio to determine if you qualified for the loan. Essentially, the lender wants to know if you can afford the loan payments over a long period.

This same principle is applied to business. The financial information can be obtained from a health care organization by reviewing their financial statements. Financial statements can tell a lender if the organization is making enough money (revenue) to afford the debt associated with a loan.

Select 1 of the following financial ratios listed below to use for this discussion:

• Current ratio
• Debt to asset ratio
• Free cash flow ratio
• Price-earnings ratio
• Profit margin ratio
• Return on total assets ratio
• Working capital ratio

Use your selected financial ratio and respond to the following in a minimum of 175 words:

• Explain how the financial ratio you selected is calculated.
• Explain why a financial institution or investor would use the financial ratio.
• Explain what the result of the financial ratio calculation would tell you about the organization’s financial status.
• Give an example of how you would use 1 of the financial ratios in your personal finances or current profession.