{"id":1574,"date":"2015-10-23T13:15:20","date_gmt":"2015-10-23T17:15:20","guid":{"rendered":"https:\/\/fluentricciardi.com\/?p=1574"},"modified":"2022-01-31T13:16:19","modified_gmt":"2022-01-31T17:16:19","slug":"performance-indicators-for-small-business-owners","status":"publish","type":"post","link":"https:\/\/fluentricciardi.com\/performance-indicators-for-small-business-owners\/","title":{"rendered":"Performance Indicators for Small Business Owners"},"content":{"rendered":"
Financial Ratios<\/h4>\n
Financial ratios are metrics that help measure the health and performance of a business. Such ratios help tell the story behind what\u2019s disclosed in the company\u2019s financial statements, and they are relevant for both small and large businesses. They are also referred to as Key Performance Indicators (KPIs).<\/p>\n
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Financial ratios are calculated based on information contained within the company\u2019s financial statements. Once calculated, a particular ratio is put to use by making the following comparisons:<\/p>\n
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With one\u2019s own business in a prior period (actual and budget\/business plan).<\/li>\n
With one\u2019s own business in the current period (actual and budget\/business plan).<\/li>\n
With another business (same industry \/ same approximate size) in a prior period.<\/li>\n
With another business (same industry \/ same approximate size) in the current period.<\/li>\n<\/ul>\n<\/div>\n
Besides helping you evaluate the health of a company, financial ratios can identify, through the use of trend analysis, potential problems in the realms of profitability, liquidity, return on equity, going concern, potential bankruptcy, solvency, etc.<\/p>\n
On the other hand, the use of ratios can help identify \u201cwinning combinations\u201d that the business owner never even considered.<\/p>\n