Ratio analysis. Financial Position of a company

Essay from the year 2015 in the subject Economics - Finance, grade: 2.1, , language: English, abstract: The financial ratios are the most common and widespread tools to examine an enterprise¿ financial condition. They can be used to compare the performance of the business over the period of time or different firms in different industries. However, the ratios constitute just a raw computation of the financial standing and don¿t take into consideration information such as the size of enterprise. The financial ratio analysis allows creditors and investors to understand the financial position of the business and areas, which have to be improved. The ratio analysis allows the industries to determine their strengths and weaknesses. The financial ratios are classified into the five main categories: profitability, liquidity, working capital management, capital structure and stock market performance.