Financial Ratio Analysis

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement.

Ratio analysis can mark how a company is performing over time, while comparing a company to another within the same industry or sector.

Ratio analysis may also be required by external parties that set benchmarks often tied to risk.

While ratios offer useful insight into a company, they should be paired with other metrics, to obtain a broader picture of a company's financial health.