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Financial statements of any firm cannot represent its entire
status. For better understanding, it is necessary to diagnose
the health of the firm through ratios. Financial ratios
are necessary while taking crucial decisions regarding its
stake. Studying the deviations (ups and down) of the business
and by checking the intrinsic value of the firm, we can
see the true picture of the firm's financial status. There
may be a lot of reasons behind these deviations. Only with
the help of financial ratios we can predict the actual picture
of the future and take decisions accordingly.
After calculating these ratios it has been found that there
are many variations in the respective years 1995-2007. Why
these variations are occurring and what are the effects
of such variations? Without understanding all these we cannot
get to see the real picture of the business concern. While
taking decisions what should be taken into consideration
of these fluctuations, how these ratios are helpful for
a business unit? These are all covered in this article.
These ratios provide not only a clear picture of the present
position of the firm but also all futuristic dimensions
of its business. These ratios are more useful to the stakeholders,
investors and to the entrepreneur. For better understanding
and conceptualizing these ratios an attempt has been made
in this regard with the help of an example of world's lowest
cost producing company Tata Iron and Steel Company (TISCO).
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