Foundations of Financial Management

January (Doctors In Business Journal) - Financial ratios refer to relationships obtained from the financial information of a company, which are utilized for comparison purposes (Eagan, 2018). Financial ratios include return on assets (ROA), return on investment (ROI), and debt-to-equity. They are obtained from dividing one account balance with another (Eagan, 2018).  These account balances are obtained from a company's financial statements, such as cash flow statements, balance sheets, statements of changes in owner's equity, and income statements. Moreover, financial ratios form useful tools that help business owners and managers measure their progress according to their predetermined objectives (Eagan, 2018). Additionally, some of the useful purposes of financial ratios include examining financial statements, making a decision, planning as well as forecasting, judging the performance of a company, realizing gaps, and finding solutions and comparative analysis.

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