International Journal of Social Science And Human Research ISSN(print): 2644-0679, ISSN(online): 2644-0695 Volume 05 Issue 12 December 2022 DOI: 10.47191/ijsshr/v5-i12-50, Impact factor- 5.871 Page No: 5645-5648 IJSSHR, Volume 05 Issue 12 December 2022 www.ijsshr.in Page 5645 Financial Ratios as an Analysis Tool Eduardo Sá e Silva 1 , Adalmiro Pereira 2 , Tânia Teixeira 3 1,2,3 ISCAP – P Porto; Ceos Member ABSTRACT: This work aims to make a practical application of an analysis with financial ratios and then draw several conclusions. Through these, we can highlight that the company obtains guidelines for its strategy in terms of implementation and control. The different ratios support different areas and should therefore be analyzed by type of ratio. This study is an academical example, and should be seen by this point of view KEYWORDS: financial ratios, profitability, financial statements, ROE 1. FINANCIAL RATIOS Financial ratio analysis is the technique of comparing or relating between two or more items of financial data in a company's financial statements. It is primarily used to make comparisons over time and across different companies or industries. Determining individual financial ratios by period and tracking the change in their values over time is done to detect trends that may be developing in a company. For example, a rising debt-to-asset ratio may indicate that a company is overburdened with debt and may eventually face default risk. Financial ratios are grouped into the following categories: Liquidity ratios; Leverage rates; Efficiency indices; Profitability indices; Market value indices. 2. PRACTICAL EXAMPLE OF THE USE OF RATIOS The following data of the company XYZ are known: Swing Value (thousands of euros) Synthetic Balance Sheets headings Year 1 year 2 Year 3 Active non-current asset tangible fixed assets 390 500 640 current assets inventories 26 76 100 Customers 97 85 144 Other accounts receivable 35 61 103 Box + Dept. banking 3 two 1 161 224 348 Total Assets 551 724 988 Equity and Liabilities Equity capital 214 214 214 Transited results -65 7 75 Net income for the period 72 133 193 Total equity 221 354 482