Financial Management: Ratio Analyses

Planning is the key to success. Good financial plans must take into account the organization's strengths and weaknesses. It is like a physician taking into consideration a patient's genetics in order to prescribe a holistic regime of treatment. And just as the physician determines the health of the patient by means of laboratory tests, the financial manager uses the tools of financial analysis to determine if budget standards are being met. Financial analysis may also be carried out by outside parties - creditors, investors, the IRS, and others - to safeguard their interest. The yardstick usually used to judge the performance of a company is a ratio or an index. The analysis and interpretation of various ratios give a better understanding of the financial condition of a company. This book examines the financial ratios available to businesses for judging their performance and the viability of their companies.