Explain how financial ratio may help the financial manager to achieve the goal of financial management

Expert Solution

Financial ratios are very important in achieving financial management goals because-

1. They help in analyzing performance of the business in terms of profitability etc and tell the managers what aspects of the costs or revenues they need to focus on.

2. They help in understanding the solvency position of the company i.e. tell how probable it is that the firm will remain solvent.

3. They also describe the liquidity position of the firm and help in understanding how much extra funds might be required.

4. They also give indications on the stability and sustainability of the business.

jeff jeffy answered 2 years ago

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Explain how financial ratio may help the financial manager to achieve the goal of financial management

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