If I want to invest in some solid stock in a company which financial ratio would be most helpful... I was thinking Liquidity Ratio but Profitability Ratio looks good to which should I use?

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Originally Posted by Rennie

If i want to invest in some solid stock in a company which financial ratio would be most helpful.....I was thinking Liquidity Ratio but Profitability Ratio looks good to which should i use?

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I'm a big fan at the liquidity ratio because it tells you so much about the company.

1. It tells if a company is able to pay their current debts with only their liquid assets.
2. Any company that have to cash in their long-term assets just to meet current obligations tells me that the company isn't financially secure.

I like the Liquidity ratio!