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What are financial ratios used for?

The numbers found on a company’s financial statements – balance sheet, income statement, and cash flow statement – are used to perform quantitative analysis and assess a company’s liquidity, leverage, growth, margins, profitability, rates of return, valuation, and more. Financial ratios are grouped into the following categories:

What are the 20 most important ratios for financial analysis?

From profitability to liquidity, leverage, market, and activity, these are the 20 most important ratios for financial analysis. Profitability ratios measure a company’s ability to generate earnings ( profit) in relation to its revenue, operating costs, shareholders’ equity, and balance sheet assets.

What is an example of a financial ratio?

For example, comparing the return on assets between companies helps an analyst or investor to determine which company is making the most efficient use of its assets. Users of financial ratios include parties external and internal to the company:

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