Ratio Analysis

Ratio analysis is a financial tool that compares different numbers in a company's financial statements to assess its performance and health. By calculating ratios, like profit margin or debt-to-equity, analysts can judge how well a company is managing its resources, generating profits, and meeting obligations. This analysis helps investors, managers, and stakeholders make informed decisions by providing insights into efficiency, profitability, liquidity, and financial stability. By benchmarking these ratios against industry standards or past performance, users can better understand the company's strengths and weaknesses.