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Why do analysts calculate financial ratios?

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Question added by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town
Date Posted: 2014/04/06
Khaleel Ullah
by Khaleel Ullah , Procurement Manager , MIDDLE EAST TECHNICAL SOLUTIONS COMPANY

Based on the objectives the ratios are calculated. For example, If an analyst want to know the liquidity of an organization then he will look for Liquidity ratios etc., In general we will find many insights of  a company through financial rations, which will help us in making decisions like to buy a company/company share,to invest in that comapny, to track performance of a company with current year and previous years, to find out reasons for low performance, to take important decisions like leveraging startegy etc.,

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