Financial Ratios An Investor Needs To Know?

One thing about Financial ratios is that they do not give u an insight into the long-run profitability of a firm or business. Financial Performance indicators only tell us about the historical performance of a business. Historical performance does not guarantee good performance of a business in the long run or future. But Non Financial Performance indicators e.g Management performance indicators, Product quality test, Innovative learning test, Customer relations etc, pose ways of measuring the performance of company in the long run. But there are still some ratios that might guide on investing in company.

1. EPS; Earnings per Share, using at least a 5yr trend analysis would help u in making your decision.
2. Gearing ratio: it would give u an insight on what the company is using to finance its buisiness.
3. Return on shareholders funds: A gives the percentage return on shareholders equity
4. Return on total assets.

all these ratios are enough for u to make your decisions