Financial Ratios

The financial data itself may not fully understand the company's performance and financial situation. It is difficult to evaluate independent numbers without comparing with specific specifications or standards. Ratios provide a set of standardized parameters that can be compared across enterprises. Companies' proportion can be evaluated against industry benchmarks, and the company's relative position with colleagues can be grasped. Depending on the nature of analysis required, there are different types of ratios.

There are various financial ratios to analyze various aspects of the company's financial condition, performance and cash flow. The financial ratios calculated and analyzed under certain circumstances will vary depending on the users of the financial statements. For example, shareholders are primarily interested in corporate profitability and solvency, creditors pay attention to solvency, liquidity and profitability in descending order of importance, and creditors / suppliers mainly focus on business liquidity etc. I am interested.

Financial ratio analysis is a process of comparing key financial information displayed in the company's financial statements and analyzing these data indicators to identify the company's current financial condition and reasons behind the recent financial performance Embrace expectations for future prospects, which is a mathematical indicator calculated by. For example, net margin is the financial ratio to compare the net income of a company with the net profit and to look up the company's profit per $ 100 sales. The net margin ratio helps to determine whether a company is more profitable than other companies or whether profitability will improve at different points.

Profitability measures the ability of a company to make a profit for its owner. While the liquidity ratio and the solvency ratio explain the financial condition of the business, the ratio of profitability and efficiency can convey the financial performance of the business. Important rates of return are as follows. Cash flow ratio is mainly used to evaluate the company's revenue quality. Since net income information is based on the concept of accrual basis and judged by an important management team, the cash flow ratio (also called performance ratio) provides a more equitable assessment. Cash flow as an example

The financial ratio is a useful indicator of the company's performance and financial situation. Most ratios can be calculated from the information described in the financial statements. You can analyze trends using financial ratios and compare their company's finances with the financials of other companies. Sometimes ratio analysis can predict the company's future bankruptcy. First, the profitability of the company is clearly indicated by the capital investment return on profit (ROCE) and the gross profit margin, the second is decreasing from 2009 to 2010, but the first is It is getting higher and higher. Also, due to the gross profit margin, there is a possibility that it may decline compared with the same period last year, which is not good for our business. Profitability varies depending on age / damage / theft, as well as underestimation / overestimation of stocks. Also it depends on general declines and rising selling prices