How can you evaluate a company's efficiency using financial ratios?
Financial ratios are numerical indicators that measure various aspects of a company's performance, such as profitability, liquidity, solvency, efficiency, and growth. They can help you evaluate how well a company uses its resources, manages its operations, and generates value for its stakeholders. In this article, you will learn how to use four common financial ratios to assess a company's efficiency: inventory turnover, receivables turnover, asset turnover, and return on assets.