Tuesday, October 17, 2006

Financial Ratios

Financial ratios help us to make some sense out of the number crunching in the profit and loss account and the balance sheet of a company. Though it appears a daunting exercise for newbies, one can easily understand the process because it's not that complicated.
Before initiating the numbers game, I would prefer to first ask myself the question as to what is the purpose of my looking at the financial ratios of that particular company. That question will set me into a guided direction istead of just completing a template.
It is also important to study the ratios in comparison with the other industry players and the industry standards itself.
Here's an article from ICMBA which talks about Financial ratios. This site also gives you articles on various topics of Economics, Marketing, Accounting, Strategy, Management, Statistics and Operations.
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