Business Ratios

In order to know what the financial position of your company is, you must compare the true figures extracted from the financial statements to other figures. Such comparisons are the essence of business and financial ratios. These ratios can be established from the various key figures on the financial statements. Business ratios can be a powerful tool because they allow you to immediately grasp the relationship expressed. You can easily access your business performance over time by calculating and recording a group of ratios at the end of every accounting period. This will help you to compare your business with others in the industry.

The comparison of you ratios to those in other business will help you to see the possibilities for improvement in major areas. Among the dozens of financial ratios, Efficiency Ratios, Profitability Ratios, Solvency Ratios, Liquidity Ratios and Financial Ratios are some of the most commonly considered ratios to have the most value for making small business decisions.

You have written a good and compact introduction of Business ratio analysis. This is a tool needed to improve the performance of a business. Business Ratio Analysis plays an important role in the progress of business strategic planning. Financial Ratios are calculated by comparing the current year figures to previous years, other companies, the industry, or even the economy to judge the performance of the company. I understand all these, but tell me which one would be better, a ratios analysis software or a a ratio analysis consultant.