Financial Ratios Analysis and its Importance

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…

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Key Financial Ratios

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…

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