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Divide one number by the other to calculate ratios. These numerical values are calculated to evaluate a company’s performance in comparison to others or over time. Commonly used ratios in the business world include liquidity ratios – which measure short-term solvency and ability to meet liabilities; debt/equity – which shows how much of a firm’s capital is financed through debt versus equity investments; and asset turnover – which looks at efficiency of generating sales from existing resources. Additionally – these can be further broken down into various subcategories like current ratio, quick ratio, times interest earned etc.

Comparing results to industry averages can help you determine whether your organization is performing better than its competitors or falling behind. – looking at median values for certain metrics) – it becomes possible to gauge whether a given organization is outperforming competitors or falling behind when it comes achieving financial objectives. For example – if one has higher revenue but lower profit margins than average then there may be room for improvement in terms operational efficiency whereas organizations that consistently score above average could potentially benefit from expanding operations more aggressively.

In conclusion, analyzing key ratios provides valuable insights into overall performance of firms and helps inform strategic decision making processes; so it’s important that businesses understand how such calculations work & keep track of relevant trends amongst their particular industries when considering courses for action