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Financial Ratios Analysis

  • Felix I. Lessambo
Chapter

Abstract

Ratio analysis is a diagnostic tool that helps to identify problem areas and opportunities within a company. Financial expert shall use ratios with caution, as there is considerable subjectivity involved, in their computation. More, ratios may not be strictly comparable for different firms due to a variety of factors such as different accounting practices, policies, and the level of risks accepted by the management. Furthermore, if a firm is engaged in diverse product lines, it may be difficult to identify the industry category to which the firm belongs.

Keywords

Financial ratios Liquidity ratios Solvency ratios Profitability ratios Efficiency ratios Debt ratios Operating performance ratios Cash flows indicator ratios Investment valuation ratios Strategic financial ratios Bankruptcy ratios 

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Felix I. Lessambo
    • 1
  1. 1.Central Connecticut State UniversityNew BritainUSA

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