Financial Ratio Analysis

Overview

Financial ratio analysis transforms raw financial statements into comparable metrics across five categories. Ratios are meaningful only in context — compare against industry benchmarks, historical trends, and peer companies.

When to Use

Trigger conditions:

• User has financial statements and needs to assess company health
• User comparing financial performance across companies
• User performing due diligence or credit analysis
• User asks "is this company financially healthy?" or "analyze these numbers"

When NOT to use:

• For valuation → use DCF or comparables
• For ROE deep-dive → use DuPont Analysis
• For strategic assessment → use SWOT