Fiducia TogetherRatio analysis
Reading a set of accounts by comparing numbers with each other.
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.
What it means
Ratios group into profitability (gross and net margin, return on capital), liquidity (current ratio, quick ratio), efficiency (debtor days, stock turn) and gearing.
Why it matters
A single number means little; a ratio compared with last year or with a sector benchmark means a lot. It is how lenders and buyers read accounts in five minutes.
What it looks like in practice
The two worth checking yourself: the current ratio, which is current assets over current liabilities, and gross margin over time.
What to watch out for
Comparing ratios across different industries. A supermarket and a consultancy have completely different normal ranges, and a benchmark from the wrong sector is worse than none.
Where to get proper advice
Your accountant. This is exactly the kind of question they answer in ten minutes and most owners never ask.
Where to read more
Last reviewed 2026-08-28 by Fiducia Together · Next review due 2027-08-28
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.