accounting ratios

Accounting ratios are tools used to analyze a company's financial health by comparing different numbers from its financial statements. They help show how well a company is managing its resources, generating profits, and meeting obligations. For example, liquidity ratios assess if a company can pay its short-term bills, while profitability ratios indicate how efficiently it makes money. These ratios provide valuable insights for managers, investors, and analysts to make informed decisions, track performance over time, and compare companies within an industry.