"Ratio Analysis Offers An 'Gt a glance' View Of Financial Performance And Position": Whiz Consulting

DALLAS - April 21, 2022 - PRLog -- Whiz Consulting is a well-known accounting and bookkeeping company operating in the United States. In their recent interview, they highlighted the significance of ratio analysis. One of their accountants quoted, "When we complete the preparation of the financial statements for our clients, the primary interpretation is via ratio analysis. It would be best if you had it to know how you've performed and where you stand economically. It is like the first bite when you're hungry, a little satisfying but leaves you wanting more. In simple words, it offers an 'at a glance' view of your financial performance and position."

Ratio analysis involves using various elements of financial statements to derive meaningful insights. It can be only a balance sheet, profit and loss, cash flow, or items from all the sources. It delves deep into the realm of:

• Profitability- Signaling the company's ability to earn profits-gross profit ratio, gross profit margin, net profit ratio, net profit margins, operating profit, etc.
• Liquidity: Defines the company's ability to clear the short-term debt obligations (includes current ratio, quick ratio, acid-test ratio)
• Solvency: Company's ability to pay long-term debt obligations (Debt-equity ratio, interest coverage ratio, etc.)
• Turnover: Indicates the company's efficiency in turning assets into sales and profits (assets turnover, inventory turnover, etc.)
• Market valuation: Determines a company's value in the market and the prospect of attracting or deflecting investors (earning per share, Price-earning ratio, etc.)

Ratio analysis offers better insights when more than one is used. It facilitates comparisons with industry benchmarks, other entities, or the business itself. The different ratios cover various aspects of the financial statements and provide an overall single glance view. It can help detect potential red flags in advance. For example, if the inventory turnover ratio increases way more than the previous year, it may signify working capital blockage. These issues can snowball into a massive problem if not treated early.

https://www.whizconsulting.net/us/ratio-analysis-services/