FINANCIAL BASICS: RATIOS IN SUMMARY

No single ratio will give investors all the answers needed to make an investment decision. But they each add valuable pieces of information to the puzzle! Ratios can be incredibly useful for telling us information about a company that is not obvious by simply reading the financial statements. They allow lenders, investors, management teams, and shareholders to make comparisons of a company’s own performance with its past performance, and with other companies in the same industry. Financial statements on their own tell us very little without ratios!