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.