Organize Your Financial Ratios Analysis with Palms

EMuresan Working Paper No. 02-01

20 Pages Posted: 28 Mar 2003

See all articles by Elisa Muresan

Elisa Muresan

Napa Valley College

Philip Wolitzer

Long Island University - Department of Accounting, Taxation and Law

Date Written: September 20, 2004

Abstract

Financial ratios are useful measures to provide a snapshot of a company's financial position. There are so many of them, making it difficult to decide and memorize which one(s) would be the most appropriate to be used for getting the overall financial picture about a company. Additionally, the interpretation of the calculated ratios plays an important role in determining the quality of the financial analysis of the company. This article presents a mnemonic formula, which is intuitively appealing, original, and innovative; serving as an aid for identifying the five most useful categories of financial ratios to obtain the overall picture of a company's financial position, the PALMS (Profitability, Asset utilization, Long-term solvency, Market value, and Short-term solvency ratios). Not only is PALMS easy to remember, it is also flexible to use and systematically intuitive to interpret. PALMS help analysts to better organize their process of analyzing a company's financial position to arrive at a comprehensive and accurate conclusion about the company.

Keywords: PALMS technique, Financial Ratios

JEL Classification: G30, M41

Suggested Citation

Muresan, Elisa Rinastiti and Wolitzer, Philip, Organize Your Financial Ratios Analysis with Palms (September 20, 2004). EMuresan Working Paper No. 02-01, Available at SSRN: https://ssrn.com/abstract=375880 or http://dx.doi.org/10.2139/ssrn.375880

Elisa Rinastiti Muresan (Contact Author)

Napa Valley College ( email )

2277 Napa Vallejo Hwy
Napa, CA 94558
United States

Philip Wolitzer

Long Island University - Department of Accounting, Taxation and Law ( email )

School of Business
1 University Plaza
Brooklyn, NY 11201
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1,400
Abstract Views
6,871
rank
14,731
PlumX Metrics