Financial Ratios

1st Edition

How to use financial ratios to maximise value and success for your business'.


  • Richard Bull
  • Financial Ratios

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    Have you ever worried about being expected to understand what finance people are saying when they quote ‘gearing ratios’ or ‘equity yields’ at you? Whether you are in a large organization or just starting out on your own you will want to avoid missing something important and know how you can achieve the financial targets that are critical to you and your business. It is important for all those engaged in business to understand how financial ratios can be used to measure the performance of a business. This has never been more urgent and important, when corporate frauds and corporate governance are high on the public agenda. However it is also important to understand how they can be used positively to maximize value and success in a business. This book covers the full scope of business. It uses a model, the Enterprise Stewardship Model which has received international acclaim, to illustrate the power – and the limitations – of financial ratios and explore the tangible and intangible aspects of creating value in a business. It shows how ratios can be used to describe, measure, and help to maximize, value and success. And it includes worked examples to illustrate how to generate and calculate key financial ratios. The CD that is included with the book enables the reader to both understand and apply the subject for themselves through the use of interactive exercises. It also includes a short introductory video, a slide show and some structured questions to prompt a strategic business review using ratios. Relationships are at the heart of this book. Ratios themselves are relationships – between different sets of numbers or measurements. It is important to understand them and be able to work with them. But is also important to understand and be able to work with people in a business and this book looks at different perspectives on a business and explores how financ

    Key Features

    * Financial ratios can add value to any business - understand how * Do you your customers need to understand what the finance department is telling them and what they should do about it? * Understand the strengths and shortcomings of financial ratios which will help you grow and manage your business * Accompanying CD enables the reader to both understand and apply the subject for themselves through the use of interactive exercises


    Finance Directors; Non-executive Directors; Business Managers

    Table of Contents

    The place of financial ratios in business success The role of financial ratios Creating value Measuring value Understanding financial ratios Funding management - the gearing ratio Asset management - the asset turnover ratio Value add management - the profit margin Tax management - the effective tax rate Growth management - the pay out and retention ratios Using financial ratios The composite ratios The place of financial ratios in strategic management Perspectives on financial ratios The purpose of ratios – the three Eff's The source and application of financial data for ratio analysis A Benchmarking Example Further Reading


    No. of pages:
    © 2007
    CIMA Publishing
    Print ISBN:
    Electronic ISBN:


    "I would strongly recommend this work as essential reading, not only for budding entrepreneurs, but for all those from non financial backgrounds whose career paths take them into jobs that carry profit responsibility. It will also be of value to business studies students as a ‘crammer’." - Philip Sadler, CBE, Formerly Chief Executive of Ashridge Management College.