Role / Function Financial Ratios in Business

Financial ratios have a role or function that is very important in running a business or a business. Here are the roles or functions:

1. Knowing the Corporate PerformanceBy using financial ratios, businessmen or entrepreneurs can find out if a business / her business has increased or decreased performance by comparing the ratio - the company's financial ratios from the previous year.

2. Assist the Management of Planning for the FutureWith the calculation and analysis of financial ratios of the company can help management understand its performance so it can be used as a reference by management to make decisions or policy of the company to correct or improve the performance of companies in the future, such as:

a. Liquidity RatioThe aim of the Liquidity Ratio analysis is to determine whether the company has sufficient funds as well as the company's ability to pay obligations - the obligations that must be met.Thus, through this ratio, the company can make a decision everything related to whether the funds are now fairly liquid / quite smoothly or require other development policy in order to increase the liquidity of the company.

b. Profitability RatiosThe purpose of the analysis of this ratio is a measure of the efficiency of the activity of the company and the company's ability to earn a profit.
Thus, through this ratio, the company can determine whether a policy or strategy that has run the company today is quite maximal or not. Is enough profit obtained optimal or not, or whether there are costs - other costs can still be minimized, for later use by the company's management to set development policy for the foreseeable future.

c. Leverage ratiosThe purpose of this ratio analysis of which is to determine the position of the company against liabilities to other parties and the company's ability to fulfill its obligations.Thus, through this ratio the company can decide whether future company needs or do not find an investor or creditor and whether the company still has the ability to pay it off.

d. Activity RatiosThe purpose of ratio analysis is to determine the ability of the company to run its business activities such as knowing whether the activity in controlling receivable has a maximum or not, and whether the inventory management has a maximum or notThus, through this ratio, the company can determine whether the activities undertaken by the company's operations is maximal or not.

From the explanation of brief above, we can conclude that from the Financial Ratios as a tool or tools in measuring the company's finances, we can mengethaui condition of fusngsi - the function of the company's strategic and very important perananannya in determining the policy-making company is good for the present or the future of the company ,

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