A sustainable business requires effective planning and financial management through the quantitative analysis of financial statements. However, the intimidating massive amount of numbers, in these statements, requires an organized fashion to work with. The Financial Ratio Analysis is that tool, which will improve your understanding of financial results and trends, of your firm, over time by providing ratios and key performance indexes. The accurate outcome of this analysis is a prerequisite to determine strengths and weaknesses from which strategies and initiatives can be formed or make judgments concerning management effectiveness. Among the lots of financial ratios available, we have chosen 12 standard ratios for the opening version of our application, which can be divided into four major categories:
o Liquidity ratios
Measure the availability of cash to pay debt.
o Profitability ratios
Measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return.
o Operational Efficiency ratios
Measure how quickly a firm converts non-cash assets to cash assets.
o Solvency-Leverage ratios
Measure the firm's ability to repay long-term debt.
Furthermore, the financial ratios calculated in this version are the following:
1. Current Ratio
2. Quick ratio
3. Cash Ratio
4. Gross Profit Margin
5. Net Profit Margin Formula
6. Operating Profit Margin
7. Sales to Receivables Ratio
8. Inventory Turnover Ratio
9. Return on assets
10. Working Capital
11. Debt to Worth Ratio
12. Return on Net Worth
Business Insights Ltd
Disclaimer: Business Insights ITC application information and interactive financial ratios calculator are made available to you as self-help tools calculating your own organization’s financial statement figures, for your independent use and are not intended to provide investment advice.
We cannot guarantee their applicability or accuracy in regards to your individual circumstances. All provided examples are hypothetical and they are intented for illustrative purposes and we encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.