What is industry ratio analysis?

Ratio is defined as a simple mathematical statement between any two items on financial statements. Ratio is not only beneficial in terms of evaluating the financial status of company, it is also beneficial on fulfilling the planning and controlling operations and forecasting how third persons especially company shareholders, accumulation owners who want to invest shares and finance institutions see and evaluate financial status and power of the company.

How can you interpret industry ratio analysis?

These measures are benefited on evaluation of calculated ratios; comparing calculated ratios with ratios which take place in past operation periods of the company. Comparing ratios with ratios of same companies or typical ratios which are in the same sector of company or sector average. Due to same companies or companies which are in the same sector can face with same financial and operating problems, provided that in the same calculation period, taking same companies’ or typical ratios of that sector if calculated as a measure and making comparisons are the basises of this interpretation method.

Reporting Industry Ratio Analysis