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Financial ratios provide you and your audience with an objective basis for comparing the performance of your business with other businesses in your industry. In addition, financial ratios also provide you with the tools necessary to assess whether certain operations of your business need fine-tuning. The following list explains how each of the financial ratios is calculated and what it tells you about your business's financial health. The list does not include all of the ratios that you or your accountant might calculate. However, it does include those financial ratios that should be included in your business plan. They provide a clear picture of your business's ability to generate a profit, pay its bills on a timely basis, and utilize its assets efficiently.