the above ratios are not important. i am a Chartered Accountant myself. All day we do is to do financial planning of ours and also Clients. @ NO ONE USES SUCH RATIOS in practicality or while advising. @ infact the author has an engineering background, he cant say he can do better fin.planning@ just beacuse he is i a mba and has learn some ratios; and i know how these engineers understand these ratios, for them this is just an mathemetical formula. @@ this is why i always say that Engineers should not be allowed to do MBA. they then make commerce and finance sound stupid.@ the above article is an example
Re: NOT IMPORTANT
by nimit on Dec 17, 2011 09:23 PM
Infact name one CA in India who uses the above ratios apart from 1st two ratios. YOU will not find any.
It is not important how much money you make but how much you keep. If you want to get ahead in your financial life then you need to learn accounting, investing and the tax laws.
You must know the difference between an asset and a liability.
The importance of saving has been stressed. It is savings when invested judicially generate income streams that builds wealth. For fixed income salary earners savings is a must. The savings to income ratio must be reasonable. The national average in India is high because there are few safety nets provided by the Govt. Some time back a figure of 20% was the national average. One can save as per this norm. One other point about savings is that it is better to save early and save in tax free schemes. All other ratios become useful when assets are built.
The difference between rich and poor is that rich people invest their time to create monthly budget and they spend their money according to the budget.
