In order for financial ratio to be more useful, they should be COMPARED TO INDUSTRY AVERAGE OR MULTIPLE YEARS OF THE COMPANY OWN'S RESULTS.
Financial ratio refers to certain relationships which are determined from a company's financial information and used for comparison purposes. There are many financial ratios, that are used in the business world, examples are debt to equity, return on assets, return of investments, etc. Financial ratios are used to measure a company financial progress and it is also used by bankers and investors to evaluate a company financial status. For a financial ratio to be useful and valid, it must be tracked over time.
