what are financial ratios used for
Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used:
The use of financial ratios is a time-tested method of analyzing a business. Wall Street investment. firms, bank loan officers and knowledgeable business owners all use financial ratio analysis to. learn more about a companyâs current financial health as well as its potential.