Financial ratios analysis is an invaluable tool in analyzing financial statements, evaluating business performance, and identifying company issues. With the financial ratios analysis, the business evaluation will become much more manageable and easier to compare to competitors and industry average.
Investor ratios are the financial ratios that the investors use in order to evaluate the companys ability to generate the return for their investment. In general, investors usually want to know which one is a good company to invest their money in, in accordance with their risk appetites.
Like the price to earnings ratio, the current ratio is one of the most famous of all financial ratios. It serves as a test of a company’s financial strength and relative efficiency. For instance, you can tell if a company has too much, or too little, cash on hand. Financial ratios analysis for investorsFinancial ratios analysis for investorsFinancial ratios are important tools used to analyze a company’s financial condition. A company’s balance sheet, which includes the assets and liabilities of the company, forms the basis of all financial ratios. Financial ratios are used by investors to understand how the company is making money. The goal of financial ratio analysis is to determine the following:the ability of a company to make profitsthe viability of the businessthe amount of capital a company has