Proficient Financial Ratio Analysis and Interpretation For your Business
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Financial Ratio Analysis And Interpretation Services
Ratio Analysis is a method used in finance to compare various figures in financial statements or accounts, providing stakeholders with a clear and insightful interpretation. It helps assess a business’s health in terms of revenue, liquidity, operational efficiency, and profitability, which are crucial concerns for stakeholders including the business itself.
In management accounting, Ratio Analysis is typically conducted annually after financial statements are prepared. However, there are occasions when urgent ratio analysis is necessary. At TaxPeak Accountants, we offer financial statement ratio analysis services tailored to meet these needs. Our accounting experts specialize in identifying and calculating ratios, offering a comprehensive understanding of your business’s financial performance.
While financial statements alone may not always provide sufficient information to stakeholders, ratio analysis presents data in a format that enhances understanding of various aspects of the company’s operations and overall health. At TaxPeak Accountants, we provide ratio analysis services for businesses based in the UK, including locations such as London, Birmingham, Manchester, and beyond. If you’re seeking reliable ratio analysis services, we are your trusted service provider.
Types of Ratios Analysis:
Profitability Ratios
1- Gross Profit Ratio
2- Net Profit Ratio
3- Operating Profit Ratio
4- Return On Capital Employed
Solvency Ratios
1- Debt Equity Ratio
2- Interest Coverage Ratio
Liquidity Ratios
1- Current Ratio
2- Quick Ratio
Turnover Ratios
1- Fixed Asset Turnover Ratio
2- Inventory Turnover Ratio
3- Recievable Turnover Ratio
Earning Ratios
1- P/E Ratio
2- Earnings Per Share
3- Return on Net Worth
Profitability Ratios:
It compares the companies’ ability to generate revenue with its expenses to arrive at a desired rate of return and recognise if there is any shortfall. It includes ratios like:
- Gross Profit Ratio
- Operating Profit Ratio
- Net Profit Ratios
- Interest Coverage Ratio
Liquidity Ratios:
It measures the ability of a company to pay its day-to-day debt on time. It is an important ratio or test to determine whether the company can cover short-term obligations and cash flow. It includes the ratios like:
- Current Ratio
- Working Capital Ratio
- Quick Ratios
Return on Investment Ratios:
Return on Investment or Return on assets measures the return on investment concerning the investment cost. It is a broad measure of investment profitability. It includes the ratios like:
- Return on Equity
- Return on Assets
Efficiency Ratios or Activity Ratio:
It measures how well a company operates its assets to generate income. It also signifies the time a company takes to collect cash from the customer or the time it takes to convert inventory into cash, i.e., making sales. These ratios are also used by the company and its investors and creditors in looking at the operations of profitability of the company and comparing them. It includes the ratios like:
- Inventory Turnover Ratio
- Inventory Days
- Accounts Receivable Ratio
- Accounts Receivable Days
- Accounts Payable Ratio
- Accounts Payable Days
- Working Capital Turnover
- Cash Turnover
Solvency Ratios& Leverage Ratios:
It measures the company’s ability to make payments and pay off its long-term obligations to creditors. A balanced solvency & Leverage ratio indicates a more creditworthy and financially sound company in the long term. It includes the ratios like:
- Debt to Equity
- Debt to Capital
- Debt to Tangible Net Worth
- Total Liabilities to Equity
- Total Assets to Equity
- Debt to EBITDA
Market Ratios:
These ratios help to understand the economic status of the stock of a particular public traded company. They determine the connection between the price per share of a company and its earnings, growth, and assets, or we can say it helps in indicating the value of a company. It includes the Ratios like:
- Dividend Yield
- Earnings Per Share
- Price Earnings Ratio
How is Ratio Analysis in Accounting Beneficial?
Our accounting personnel at TaxPeak Accountants are experts in identifying and calculating ratios and providing you with an in-depth understanding of your business’s financial performance.
Simplification of Complex Numbers
Facilitates Decision Making
