Financial Tools
Financial ratios are a way to evaluate the performance of your business and identify potential problems. Each ratio informs you about factors such as the earning power, solvency, efficiency and debt load of your business.
There are three primary categories of ratios useful for business analysis:
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Leverage Ratios
Leverage ratios provide an indication of your company’s long‑term solvency and to what extent you are using long-term debt to support your business.
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Debt to Assets Ratio
Debt to Equity Ratio
Liquidity Ratios
Liquidity ratios measure the amount of liquidity (cash and easily converted assets) that you have to cover your debts and provide a broad overview of your financial health.
Profitability Ratios
Profitability ratios are used not only to evaluate the financial viability of your business, but also to compare your business to others in your industry.