Financial Ratio Analysis and Interpretation

Financial ratio analysis and interpretation provides accountants and businesses with a snapshot of how the company is progressing in a number or key areas. It is a process that uses data collected from key accountancy materials, including cash flow statements, income statements and balance sheets. By establishing a series of norms, ratio analysis can be used to see how the business is performing over time, both in comparison with its own ongoing performance and that of its rivals within the same sector. It is a useful means by which to evaluate things like the efficiency, liquidity, profitability and solvency of the organization, quickly and easily. Its data can then be used to formulate strategies for improvement accordingly.

This insightful tutorial offers a complete introduction to contemporary ratio analysis, touching upon financial statement analysis ratios and profitability ratio analysis and interpretation. Along with its value, core mechanics and limitations, the establishment of norms for ration analysis is also covered in-depth. Discover how ratio analysis can be used as one of the most powerful of all business strategy tools.