Ratio analysis: What are different types and how useful they are; We explain

Ratio Analysis is a way to get an objective idea of a company's efficiency, profitability and liquidity by going through its financial statements such as profit & loss statement and balance sheet. The ratio analysis is a financial tool used by investors to assess the performance of a company by evaluating its past and present financial statements. The ratio analysis can compare the company’s performance in relation to its industry peers to show evidence of where the company stands in terms of its profitability, efficiency and stock prices, among other factors. Solvency Ratios: These ratios show the company’s debt level in relation to equity, assets and earnings to gauge the possibility of the company staying afloat after having paid its loans and interest.