Financial ratios allows entrepreneurs to evaluate their company’s performance and compare it other similar businesses in their industry. Ratios measure the relationship between two or more components of financial statements. They often effectively when results over several periods are compared. It is ideal to follow business’s performance over time and uncover any signs of trouble.
What are Financial Ratios? Financial ratios are calculated relative ratios mostly derived from a company’s financial statements (see also the definition as per Wikipedia). They are required by management, financial analysts, investors, creditors, and other stakeholders to understand better and read financial statements. Also, calculating financial ratios puts the financial statements into perspective when comparing…
Financial analysis uses the interpretation of important Key Financial Ratios to understand a company’s financial situation. We can group those ratios in several categories: Liquidity ratios – help to understand whether the company can honor its obligations in the short term and if the level of Net Working Capital is sufficient Efficiency ratios – focus…
Request submitting Please wait...
