Financial ratios are an important part of the underwriting of a high risk merchant account. Financial ratios help determine the strengths and weaknesses of company operations and judge the stability of a company.
Here are a few of the most commonly used financial ratios in underwriting a high risk merchant account.
Profitability ratios determine the use of assets and control of expenses to generate a rate of return.
Activity ratios measure how quickly a company converts non-cash assets to cash assets.
Debt ratios measure an organizations ability to repay long-term debt. Debt ratios measure financial leverage.
Market ratios measure investor response to owning a company's stock and the cost of issuing stock.
Underwriters ask for financials statements for high risk merchant accounts to determine the financial stability of your company. Keep this in mind as you prepare your application. Present your financials in the best light to increase account approval.
How do your financials affect approval for high risk processing?
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