Every ratio in this chapter answers one of four questions.
Can it meet short-term obligations, and use its assets well?
Can it meet long-term obligations and survive?
Can it earn a satisfactory income?
What does the market think its stock is worth?
always needs a — the company's own past, a competitor, or an industry guideline. A ratio of 2.0 means nothing until you know what 2.0 is being compared against.
The organize every ratio this chapter covers — each one exists to answer one of those four questions, never more than one.