what are the financial ratios. what is the importance of using ratio

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Financial ratios are tools used to analyze a company's financial performance. They help in making informed decisions and comparisons.

Financial ratios are used to evaluate a company's financial health and performance.
They help in identifying trends and patterns in a company's financial statements.
Ratios can be used to compare a company's performance with its peers or industry standards.
Some common financial ratios include liquidity ratios, profitability ratios, and solvency ratios.
For example, the current ratio measures a company's ability to pay its short-term debts, while the return on equity ratio measures how much profit a company generates from shareholder investments.
Using financial ratios can help in making informed decisions about investing in a company or extending credit to it.

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