Business Intelligence and interpretation of ratios

Ratios are simply that — ratios: they relate one figure to another. In your own organisation they should help you and other managers to recognise the results of your management decisions on the financial performance. When doing a comparative analysis you may not have the same insight. In the case study used earlier, the analysis raised more questions than it answered. The background to New Fire Ltd allowed you to make some educated guesses about the business and why the ratios showed the trends they had. But the competitor’s background was less detailed and the comparative analysis was more difficult, with a lot of guesswork needed.