How will draw inferences about the financial health and
performance using ratio ?
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Answer Posted / h.r. sreepada bhagi
One can ascertain the financial health of a company by
comparing Liquid Ratio (Quick Ratio) or Current Ratio with
the Standards, Industries & other leading companies data
periodically.
Gross Profit & Net Profit ratios can be used to ascertain
the operating efficiency and profitability of the company by
comparing it with the Industry & other leading companies in
the Industries for different periods.
Likewise, Debt-Equity Ratio, EPS, P/E Ratios, etc. can be
used to measure an organisations ability to perform,
compete, grow and potential over a period of time.
Comparison of any ratio of the same company over several
years, comparison with the Industry, with other Companies
will help drawing inferences about the growth, ability and
potential of a company.
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