Definition of Financial Ratio

Definition of Financial Ratio


Financial ratios are used to analyze the financial standing of the business. Also for the comparison of different companies in different industries financial ratios use.

Definition of Financial Ratio

A mathematical comparison of the financial statement, accounts or category is called financial ratio. Through this ratio investors and management knows about the performance of the business. Through this ratio management also knows about the area of the business which needs improvement.

For the comparison of the financial information small and big companies use the financial ratio. This ratio not considered the size of the companies and industries.

Companies use this ratio to find the strength or weakness of the companies.

Financial ratio divided into 7 categories which are liquidity, solvency, efficiency, profitability, market prospect, investment leverage, and coverage.

You can Check here Financial Ratios Formulas.

Financial Ratio is a forum where you will learn about all ratios definitions and formulas.

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