It is said – Investing in stocks is like owning a part of a business.

If you want to be successful in business, you must know how to analyze financial ratios and draw a conclusion about the financial health and potential of a business.

To analyze financial ratios for the company on a standalone basis may not have any relevance so it is always advisable to make an inter-firm and intra-firm comparison.

When you come across a situation where you are comparing a company which is in an initial phase earning a revenue of Rs 50 crore and comparing it with a matured company earning a revenue of Rs 5000 crore.

In such a scenario it is not an apple-to-apple comparison. So to analyse financial ratios, make proper comparative analysis meaningful.

When you come across a situation where you are comparing a company that is in an initial phase earning a revenue of Rs 50 crore and comparing it with a matured company earning a revenue of Rs 5000 crore.

In such a scenario it is not an apple-to-apple comparison. So to analyze financial ratios, make proper comparative analysis meaningful.

How to analyze Financial Ratios?

To determine the financial health of a company, one needs to analyze the financial ratios given in this