Ratio analysis is an effective way to understand the financial performance of a business. It involves calculating and analysing a series of financial ratios based on financial statements. When combined with trend analysis (reviewing the pattern or trend of measures over time), ratio analysis provides powerful insights into the financial strength of the business. There are many well-established ratios that can provide a good starting point for ratio analysis.

Ratio and trends can also help in maximizing your profits as profits are the core of every business operation. Through ongoing analysis of the Management Accounts, particularly fixed and variable costs, we can identify where savings can be made – crucial for profit enhancement.