Financial ratios

What is meant by Financial ratios?

The term "financial ratios" refers to quantifiable metrics used to measure and analyze a company's financial performance. These ratios serve as a basis for business decisions and help evaluate the company's financial health, profitability, liquidity, and efficiency.

Typical software functions in the area of "financial ratios":

• Calculation: Automatic computation of financial ratios based on available data.
• Dashboards: Real-time visualization of financial ratios.
• Comparative Analysis: Comparison of ratios over different periods or between companies.
• Report Generation: Automatic generation of reports on financial ratios for management and stakeholders.
• Forecasting: Prediction of future financial ratios based on historical data.
• KPI Monitoring: Continuous tracking of predefined key performance indicators.
• Integration: Connection with accounting systems, ERP systems, or external data sources.
• Alert Functions: Notifications for deviations from target values or critical developments.
• Benchmarking: Comparison of financial ratios with industry standards or competitors.
• Archiving: Storage and management of historical financial ratios for long-term analysis.

Examples of "financial ratios":

• Profit Margin: Ratio of profit to revenue.
• Equity Ratio: Proportion of equity to total assets.
• Liquidity Ratio: Company’s ability to cover short-term liabilities.
• Return on Assets (ROA): Ratio of profit to total capital employed.
• EBIT (Earnings Before Interest and Taxes): Operating profit before interest and taxes.
• Debt-to-Equity Ratio: Ratio of debt to equity.
• Break-even Point: Point at which revenue equals costs.
• Cash Flow: Net amount of liquid funds generated in a given period.
• Inventory Turnover: Ratio of sales to inventory levels.
• Customer Profitability: Profit per customer or customer group.