Key figures as an efficient measurement tool

Key figures support companies as an efficient measuring instrument to summarize balance sheet and profit and loss figures into understandable and categorized calculations. From this, among other things, the financial health of the company can be derived.

Ratio analysis is a quantitative method that provides an overview of a company's liquidity as well as operational efficiency and profitability in various areas by calculating different sizes in a balance sheet and income statement. In addition, it is possible to identify weaknesses or other constraints that may have developed, for example, due to excessive financial indebtedness, and to correct these by correctly implementing suitable measures. Ratios are mainly used as a measuring tool to make comparisons between different sectors or periods.

Liquidity Ratios

Liquidity ratios illustrate and measure a company's ability to settle its short-term debts before a payment default occurs. This is done by including current assets or primarily liquid funds in the calculations to assess these various ratios.

Profitability Ratios

The figures of the profitability ratios provide information on how well a company can generate revenues from its business activities. And also, how these relate to assets or capital employed.

Debt Ratio (Solvency Ratios)

The figures calculated in the solvency coefficients mainly deal with the company's indebtedness and compare it to assets, equity, and profits. This assesses the likelihood of the company's long-term survival.