ratio analysis

Ratio analysis
Ratio analysis is the organisation of information in financial statements to enable or permit entities (I.e. companies, sole traders etc) of the financial statements to deduce conclusions regarding their financial performance.
It is the initial stage in assessing an entity and it serves as a foundation for providing entities with relevant information which aids their decision of what to investigate further.
However, ratios can be expressed as a percentage, as a fraction or as a proportion. They are presented according to the needs of the users of the information.
Although, it is possible to calculate a large number of ratios, not all ratios are beneficial to users. The only ratios that may be worth calculating are those that are based on key relationships and are therefore meaningful to users.
However, there are many groups of people who are interested in using ratios. Some of these groups are shareholders, lenders, customers, suppliers, employers, govern...