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Financial Ratio Analysis And Interpretation Services


Generally, when we talk about ratio, it is just a comparison between two values or a relating. In finance, Ratio Analysis refers to a comparison of different amounts appearing in the financial statement or book of accounts which helps the stakeholders to get a precise and understandable interpretation. A business's health in terms of its revenue, liquidity, the efficiency of operations, and profitability is one of the most common interests of most stakeholders, including the business itself.

Ratio analysis in management accounting is generally conducted yearly after the preparation of financial statements. However, there might be times when you require ratio analysis for urgent work. We at Whiz Consulting can provide you with financial statement ratio analysis services. We at Whiz Consulting have accounting experts who are specialised in identifying and calculating ratios and giving you an in-depth understanding of your business financial performance. Financial statements are generally insufficient to provide information to the readers or stakeholders at first instance on their own. The numbers shown in those statements must be put into such a form or format so that stakeholders can better understand different aspects of the company's operations and its health in the expression given by the company. We at Whiz Consulting provide ratio analysis services for UK-based businesses. If you are a business based in London, Birmingham, Manchester, and any other place in the United Kingdom and need a ratio analysis services provider, we are your go-to service provider.

Types of Ratios Analysis:



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 Whiz Consulting 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

With the complex nature of financial statements, crucial information is lost in the pile of data and figures. Ratios will help draw attention to such problems and help simplify difficult statistics.

Facilitates Decision Making

Ratio analysis presents the financial statement into comparative figures, thus helping the management compare and evaluate the financial position of the firm and the results of their decisions.

Facilitates Industry Comparison

Financial ratio analysis reports of two companies can be compared to enable the company to better understand its fiscal position in the economy. It also allows the company to conduct comparisons between industry standards and intra-firm comparisons.

Frequently Asked Questions (FAQs)


Financial ratio analysis is the practice of comparing two or more elements of financial data of financial statements. Financial ratio analysis allows businesses to know their profitability, leveraging control, liquidity state, ROI, efficiency, and the economic status of the stock in the case of a public traded company.
Financial statements are generally complex and packed with insufficient numbers to provide complete information to the readers or stakeholders at first impression on their own. Ratio analysis allows stakeholders to understand this data with the help of an easier and understandable format. It also allows the top management in the decision-making process by providing lesser data to review as compared to the entire set of books of accounts.
A single ratio can not help you understand your financial health. You must calculate multiple ratios to conclude. Also, ratio analysis is based on quantitative aspects of the firm and neglects qualitative aspects of the firm.

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