Ratio Analysis

Ratio analysis is a method of evaluating a company's financial performance by comparing various financial and operational ratios to industry averages or to the company's own historical results. This analysis typically involves calculating a set of financial ratios, such as the current ratio, quick ratio, gross margin, and return on equity, and interpreting the results in order to assess a company's liquidity, profitability, efficiency, and overall financial health. Ratios can also be used to compare a company's performance to that of its competitors or to the overall industry.