Ratios are the simplest way of determining the health of an entity. Any financial decision in the corporate world is based on the output of specific ratios, be it the Gross Profit Margin or the Return on Equity. We have so many ratios covering different aspects of financial statements, capturing the entire performance of a company for analysis. Similarly, personal financial statements are analyzed and the results interpreted as per the need requiring information on specific areas, for example; a banker would like to know the safety of the capital based on the merit of a client, while the insurance company would be interested in knowing the insurability of a client. An individual may use financial statements to assess potential wealth growth and ascertain progress towards goal attainment.
At the end of the course, you will be able to understand :
- Need for Financial Health Check.
- Personal Financial Statements.
- The need to use Financial Ratios.
- Different Financial Ratios.
Need For Financial Check
The ratios for the analysis of personal financial statements need to be considered in light of an individual’s situation rather than as a standard for everyone. As in the corporate world, the ratios vary from company to company, industry to industry, and between companies operating in the same industry because of the operation or management functioning.