Numbers Don't Lie: What Does that Mean Exactly?

Financial statement analysis is one of the most widely used investment appraisal methods among analysts. It involves comparing and investigating the relationship between certain pieces of financial information derived from a business' financial statements. Ratios help businesses identify and highlight areas of both good and bad performance, as well as areas of significant changes.

Financial ratios help businesses and their stakeholders answer the following questions that are important in determining the potential future performance of the business:

• Is the business able to pay its outstanding obligations in the short-term?

• Is the business generating enough profit from its assets?

• How is the business financing its assets?

• Is the business providing sufficient returns for its shareholders?

• How does the compensation of staff relate to the overall performance of the business? 

The categories of ratios that we analyse for your business are as follows:

• Liquidity ratios

• Leverage ratios

• Efficiency ratios

• Profitability ratios

• Market value ratios