Ratio Analysis

What Does Ratio Analysis Mean?
A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

Investopedia explains Ratio Analysis
There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity, financing and liquidity. Some common ratios include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and working capital.

Related Terms

Asset Turnover
Days Working Capital
Debt-Adjusted Cash Flow
Earnings Per Share - EPS
Fundamental Analysis
Man-Year
Price-Earnings Ratio - P/E Ratio
Quantitative Analysis
Working Capital
Working Capital Management
More Related Terms

Related Links

Ratio Analysis Tutorial - If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.
Introduction To Fundamental Analysis - Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
Advanced Financial Statement Analysis - Learn what it means to do your homework on a company's performance and reporting practices before investing.

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