Financial Ratio Analysis

The Balance Sheet and the Statement of Income are essential, but they are
only the starting point for successful financial management. Apply Ratio
Analysis to Financial Statements to analyze the success, failure, and
progress of your business.

Ratio Analysis enables the business owner/manager to spot trends in a
business and to compare its performance and condition with the average
performance of similar businesses in the same industry. To do this compare
your ratios with the average of businesses similar to yours and compare
your own ratios for several successive years, watching especially for any
unfavorable trends that may be starting. Ratio analysis may provide the
all-important early warning indications that allow you to solve your
business problems before your business is destroyed by them.

 

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