Why it is important to do a financial ratio analysis?

multiple ratio analysis which indicates the financial performance to any of the company,

Financial ratio analysis help management in decision making regarding liquidity and cash flow management. It gives true picture of organization cash flow position and guide management where to generate extra fund needed or invest surplus fund available to make best use of its resources.

the exact financial ratio analysis force the management to take their decisions at the best time , secondly ; the financial ratio analysis help the firm to know their cash collections and cash disbursement which give you the ability to keep cash flow over the budget .

Ratio analysis is a useful management tool that will improve your understanding of financial results and trends over time, and provide key indicators of organizational performance. Managers will use ratio analysis to pinpoint strengths and weaknesses from which strategies and initiatives can be formed.