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Describe what operating ratios are.Identify the five operating ratios covered in your text,explaining how each of the five helps the small business owner manage his/her business.
NPV Rule
A principle stating that an investment should be made if its net present value is positive, as it's expected to add value to the firm.
IRR Rule
A decision-making tool used in finance to evaluate investments, stating that a project is acceptable if its internal rate of return exceeds a predetermined threshold.
Internal Rate
NO. However, closely related term Internal Rate of Return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments.
Present Value
The value today of a sum promised at a specified time in the future given a rate of interest. The amount that would have to be deposited today at the specified interest rate to grow into the promised sum on the specified date.
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