finance | Business & Finance homework help
Financial ratio analysis is a way of looking at a company’s financial health by evaluating its profitability, liquidity, and solvency. It gives investors and managers insight into how the business is doing in terms of income, debt, expenses and how efficiently it is using resources. This type of analysis can help them to make more informed decisions about the direction of the business. By computing various solvency, liquidity and profitability ratios it allows for an easy comparison between companies or even over time within one company so that any areas that need improvement can be identified quickly. Additionally, these ratios can be used as benchmarks which other firms may strive for in order to remain competitive within their industry.
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