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Technical note
Reference no. UVA-F-1897
Published by:
Darden Business Publishing (2019)
6 December 2019
Revision date:
8 pages
Data source:
Published sources


This note describes the most common financial ratios and how they provide insight into firm performance. The emphasis is on how ratios summarize operating behaviors and results in ways that facilitate interpretation and highlight decisions. There are three broad categories of ratios covered in the note: profitability, operating efficiency, and leverage (the use of debt financing). The note defines the ratios, explains how they provide insight, and explores complications related to their use. The concepts in this note are applied to the firm Morgan Industries, a setting that has been integrated across all the Financial Analytics Toolkit series of technical notes.


Ratio analysis; Forecasting; Operations; Financial analytics; Finance; Financial analysis

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