Zoho Bookings & SalesIQ Alignment

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Financial Ratio

Meaning: 

A financial ratio is a numerical comparison between two financial values that helps measure a company’s performance, stability, efficiency, or profitability. In simple terms, a financial ratio tells you how well a company is doing by comparing key numbers from its financial statements.

Example:

If a company makes a profit of ₹1,00,000 and has total sales of ₹1,00,000, its profit margin ratio is 100%, meaning it keeps all the money it earns.


How to understand financial Ratios:

Financial ratios help investors judge how healthy a company is.
They allow comparisons with other companies in the same industry.

Importance of Financial Ratios:   

Ratios show strengths and weaknesses in areas like profit, debt, and efficiency.
They help management make better business decisions.


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