Financial ratio analysis: liquidity, solvency and profitability ratios
The big picture
Financial ratios help to analyse the financial performance of all the activities of an organisation and all its products and services in all markets. Financial ratios are based on the balance sheet and profit and loss account of the organisation. Using financial ratios gives two types of insight: where the organisation performs best; and the financial constraints and possibilities the company has when considering new activities, project or strategies.
When to use it
It is wise periodically to analyse the financial position and financial performance of ...