Key Ratio

Key ratios are the main mathematical ratios that illustrate and summarize the current financial condition of a company. Key ratios can be used to easily obtain an idea of a company’s financial status. Companies that are in good condition financially will have superior ratios to those that are performing poorly. Key ratios take data from the subject company’s financial statements such as the balance sheet, income statement and statement of cash flows. Items on these statements are compared with other items to produce ratios that represent key aspects of the company’s financial picture such as liquidity, profitability, use of debt and earnings strength.