The financial index method is to evaluate the financial status, operating results and cash flow of an enterprise by analyzing the relevant data of the financial statements of the enterprise, and to compare with the previously determined index value to determine whether the financial index has achieved the expected effect of the evaluation method. Its advantages are: it can truly reflect the current business situation of the enterprise. The disadvantage is that it is easy to guide managers to pursue short-term economic interests while ignoring long-term interests. The financial indicator method includes the following four indicators:<br>Debt capacity index: it reflects the size of enterprise risk, including current ratio, asset liability ratio, cash ratio, interest earned multiple, asset liability ratio, property right ratio, etc.<br>Asset turnover indicators: reflect the operating capacity of an enterprise, including inventory turnover rate, fixed asset turnover rate, current asset turnover rate, total asset turnover rate, etc.<br>Profitability index: it reflects the level of enterprise profit, including net profit rate of sales, net profit rate of assets, profit rate of main operating cost, etc.<br>Growth ability index: it reflects the development ability of an enterprise, including business growth rate, net profit growth rate, main profit growth rate, etc.<br>
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