Financial Ratios Analysis for Assessing Company Performance

When analyzing a company's performance, several key financial ratios are typically assessed to gain insights into its financial health and operational efficiency.

Key Financial Ratios:

• Profitability Ratios: These ratios, such as Return on Equity (ROE) and Gross Profit Margin, measure the company's ability to generate profits relative to its revenue and equity.
• Liquidity Ratios: Ratios like Current Ratio and Quick Ratio assess the company's ability to meet short-term obligations with its current assets.
• Debt Ratios: Debt-to-Equity Ratio and Interest Coverage Ratio help evaluate the company's leverage and debt repayment capacity.
• Efficiency Ratios: Inventory Turnover and Asset Turnover ratios analyze how effectively the company utilizes its assets to generate revenue.

By analyzing these financial ratios, analysts can understand various aspects of the company's financial performance, identify potential risks, and make informed investment decisions.