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Standard Financial Ratios

2010/11/24 13:57:00 36

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Standard financial ratios refer to specific financial ratios.

Country

The average financial ratio of a specific period or specific industry.

Such as standard liquidity ratio, standard asset liability ratio and standard total assets turnover.

The role of standard financial ratios

In the analysis of accounting statements, if

Calculation

Compared with the historical data of the enterprise, the financial ratios can only see their own changes. They can not know the position of the enterprises in the fierce competition. Compared with the individual enterprises in the same industry or their industry, they can only see the difference from the other side, and the other party is not necessarily the best.

Having a standard financial ratio can be used as a reference for evaluating the superiority of an enterprise's financial ratio.

Based on the standard financial ratio, it is easier to find out the abnormal situation of enterprises, so as to reveal the problems of enterprises.

Determination of standard financial ratios

There are usually two ways, one is to use statistics.

Method

That is, the statistical results of a large number of historical data are taken as standards.

This method is assumed that most of them are normal, and the social average is reflected in the standard state, out of the average level, and is out of the normal state.

The two is the adoption of industrial procedure law, namely, based on actual observation and scientific calculation, an ideal state is calculated as an evaluation standard.

This method assumes that each variable has its intrinsic proportions, and this relationship can be recognized.

In practice, the above two methods are often used to complement each other and verify each other.

At present, the establishment of standard financial ratios mainly adopts statistical methods, and the industrial procedure law is of secondary importance.