10 Financial Ratios Explained for Beginners and Practical Analysis
Financial ratios may appear at first to be daunting but they are simply shortcuts. Rather than reading through the financial statements, ratios can give you a quick snapshot of what's happening in a business. You begin to see patterns; areas that are improving, areas that are diminishing, and areas that you may need to pay attention to. Financial Ratio Analysis Basics Financial ratio analysis is a process of making comparisons. Rs. 100 alone is not as revealing as compared to another number. Most ratios can be categorized as profitability, efficiency, liquidity or leverage. Every one has a different perspective on performance. Key Financial Ratios List Certain ratios appear virtually everywhere because they're easy and handy. These are typically the first ones that analysts pay attention to and go into. What they don't tell is everything, but a quick view is enough of a snapshot of how a business is doing. Return on Assets Ratio (ROA) Return on Assets (ROA) is a compan...