what are the parameters which will affect a company ability to buy a new product based on its current financial situation. Is there any metrics or ratios which will tell the current company purchasing power?

  • $\begingroup$ This question seems to be more of an accounting question than an economic question. $\endgroup$ – Jamzy Jan 21 '15 at 5:46
  • $\begingroup$ newbie to economics..actually a CS major...I thought economics is superset of finance... $\endgroup$ – alias_neo92 Jan 21 '15 at 7:09

You could probably get a very good idea of a company's ability to spend money - that is, make capital investments, develop new ventures etc. - by investing its balance sheet and develop both liquidity and leverage ratios. High liquidity with low leverage means that a company is probably not investing enough. Low liquidity with high leverage ratios would indicate a company has already invested heavily and is not in a position to undertake new ventures etc.

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