Answer the following questions in your own words:

Different ratios are important to different stakeholders depending upon the intended target audience.

1. When evaluating whether to purchase public stock (i.e. an investor), what ratio should be considered to be most important and WHY? (HINT: Preferred stock represents perpetuity, having no maturity dateFixed dividend payment carrying a higher order of precedence than common stock dividendsNo binding contractual obligation of interest on debtDoes not haveOwnership privilege of common stockLegal provisions that could be enforced on debt
2. What ratio(s) should a banker or lender consider to be most important and why?