Using Financial Ratios To Assess Organizational

To know the financial condition of a firm is important for all the stake holders. Planning of company’s strategy or modification in the existing one is based upon the financial health of business. Investors will plan for their investment according to the business condition. They may increase their investment or exit as per current and future prospect of the business. So it is very important to have a set of tools to know the financial condition of any firm. Ratio analysis, Trend Analysis, Du pont Analysis, Comparative Analysis etc are some of the useful tools. Ratio analysis is most famous and easy one and it has been used by researcher and financial analysis for a long time. Basically, ratio analysis is done on the basis of financial statements-Profit and loss account and balance sheet. Under the ratio analysis, certain ratios are calculated by taking different pair of heads. Let’s have a look on some ratios.Profitability Ratio – Net profit margin and Gross profit margin come under the profitability ratio. It is the ratio of profit to Net Sales. We can know the profitability condition of firm with the help of this ratio.There are some other ratios like Account receivable turnover