Do you check the financial health of your business? If not, you should do so regularly. Here’s how.

 

As a business owner, you should be fully up-to-date with the overall financial health and wellbeing of your company. Ratio analysis is a great way to do this.

Ratio analysis is one of, if not, the most powerful tool for keeping track of your finances. It is calculated by comparing a number of different aspects of your company, including:

•Profitability

•Liquidity

•Efficiency

•Leverage

•Activity

•Investor returns

The ratios are calculated by taking current year figures and then comparing them to past years, other companies, or the sector you are in. The ratios can also be used to benchmark your business against leaders in your sector.

Ratio analysis can also act as an early warning system for your business.

Download the template now (see above left). Also, please read this handy guide to ratios.