For companies and businesses, financial ratios are often used to present easy-to-understand information to investors or banks and financial institutions. This helps external parties grasp the financial status of a business when requesting funding from an investor or applying for loans. And it’s not just for companies that operate on a large scale. Financial ratios are important for small businesses as well, especially start-ups looking for investor funding or needing to be granted a financial loan. Financial ratios are also important for internal business processes. These ratios are useful for conducting analyses that provide meaningful data about a business and its financial stability. It can help track performance, identify any financial difficulties, save money and help set goals and KPIs and show future earnings. Over time, keeping track of these values can help identify trends that show how the business is performing and its financial position. For example, monitoring the debt to asset ratio over time will help prevent the business from becoming at risk of default. They can also help with comparing the business benchmarks to other competitors and industry averages. This is especially relevant for new businesses or those in competitive industries. We have just created a blog outlining all the financial ratios you should know as a small business owner. Check this blog out by clicking on the link blow: https://theaccountingcentre.com/knowledge-centre/financial-ratios/