What is Financial Ratio Analysis?

Ratio analysis is the quantitative analysis of financial information available in the financial statements. Financial ratios provide a detailed insight into the Company’s operational performance especially when analyzed over consecutive periods and are compared with industry. The following are the most commonly used ratios used in financial analysis:

  • Profitability ratios
  • Liquidity ratios
  • Solvency ratios
  • Investor ratios
  • Working capital ratios

We’ll use the following data (balance sheet and profit & loss account) for our examples while explaining various ratios.

What is Financial Ratio Analysis?

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