Evaluation of Financial Ratio Analysis Performance between Selective Construction Companies

Abstract

This paper is about financial management of construction companies by using financial ratios. Financial statements are the effective tool for comparative study between construction companies, from this analysis we can decide the financial position of the company. Financial management is the vital factor in the development of any construction company in any sector. The companies related to construction sector have many factors both external and internal that influence the growth of the company. In order to have control on all the components of the company management needs a tool is ratio analysis. Ratio analysis involves analyzing various ratios like liquidity ratios, profitability ratios, leverage ratio, operating ratios, market based ratios, asset management ratios etc. by analyzing these ratios for the still present the management will get an exact scenario of the position of the company. The ratios may help to know whether company’s decision is going on the right way or not and the other hand it will help the management to study these ratios and then plan and decide a target for the feature growth of the company’s. If all the ratios are maintained at their particular standard level like liquidity, debt turnover ratios etc. the company can overcome any sort of situations that may arise in the feature. The annual reports of the company form of balance sheet, profit –loss account, cash flow statements etc. ratios reflect the health of the company. Thus, ratio analysis is a gadget that can boost the performance of a company if used in a smarter way.