Financial Ratios   Tags: business, company, industry, ratios  

• Financial ratios compare values drawn from financial statements as a means of judging business performance.  The process, called ratio analysis, is used by accountants, managers and investors.  Ratios are used to examine a company’s performance over time or to compare a company to others in the same industry. 
• Many different ratios exist. Look for calculation formulas for different ratios in textbooks and reference resources in print or online.
• Industry norms are averages of the ratios for companies in the same industry and often organized by NAICS or SIC.
• Financial ratios can be used to judge corporate performance, develop business plans, identify credit risks, and to create investment strategies.

“Financial Analysis.” Encyclopedia of Small Business. Gale, 2007.

Greenawalt, Mary Brady. “Financial Statement Analysis.” Encyclopedia of Business and Finance. Macmillan, 2007.

Finch, Howard and Laurie Hillstrom. “Financial Ratios.” Encyclopedia of Management. Gale, 2006.

101 Business Ratios: A Manager's Handbook of Definitions, Equations, and Computer Algorithms. (C. Sheldon Gates) McLane, 1993. (Reference HF5657.4 .G38 1993)