Financial Ratios
2.7.1 Definition of Financial Ratios
According to Harahap (2011), "Financial ratios are numbers obtained from the comparison of one
financial statement item with another item that has a relevant and significant (meaningful)
relationship".
Meanwhile, according to Cashmere (2014: 104), financial ratios are as follows:
"Financial ratios are activities that compare the numbers in the financial statements by dividing
one number by another. Comparisons can be made between one component and components in
one financial report. Then the numbers being compared can be numbers in one period or different
periods ".
Based on the above definition, it can be concluded that the financial ratio is a result obtained by
comparing one number with another number that has a relationship in the financial statements.
2.7.2 Benefits of Financial Ratio Analysis
According to Fahmi (2012), the benefits that can be taken with the use of financial ratios, namely:
1. Financial ratio analysis is very useful to be used as a tool to assess the company's
performance and achievements.
2. Financial ratio analysis is very useful for management as a reference for planning.
3. Financial ratio analysis can be used as a tool to evaluate the condition of a company
from a financial perspective.
4. Financial ratio analysis is also useful for creditors can be used to estimate the potential
risks that will be faced associated with the guarantee of continuity of interest payments
and repayment of loan principal.
5. Financial ratio analysis can be used as an assessment for the organization's
stakeholders.
2.7.3 Types of Financial Ratios
According to Munawir (2015), there are four groups of financial ratios, namely:
1. Liquidity ratio is a ratio to determine the company's ability to finance operations
and meet financial obligations when billed.
2. Activity ratio is a ratio to determine the company's ability to carry out daily
company activities or the company's ability to sell, collect receivables and utilize
its assets.
2.7.1 Definition of Financial Ratios
According to Harahap (2011), "Financial ratios are numbers obtained from the comparison of one
financial statement item with another item that has a relevant and significant (meaningful)
relationship".
Meanwhile, according to Cashmere (2014: 104), financial ratios are as follows:
"Financial ratios are activities that compare the numbers in the financial statements by dividing
one number by another. Comparisons can be made between one component and components in
one financial report. Then the numbers being compared can be numbers in one period or different
periods ".
Based on the above definition, it can be concluded that the financial ratio is a result obtained by
comparing one number with another number that has a relationship in the financial statements.
2.7.2 Benefits of Financial Ratio Analysis
According to Fahmi (2012), the benefits that can be taken with the use of financial ratios, namely:
1. Financial ratio analysis is very useful to be used as a tool to assess the company's
performance and achievements.
2. Financial ratio analysis is very useful for management as a reference for planning.
3. Financial ratio analysis can be used as a tool to evaluate the condition of a company
from a financial perspective.
4. Financial ratio analysis is also useful for creditors can be used to estimate the potential
risks that will be faced associated with the guarantee of continuity of interest payments
and repayment of loan principal.
5. Financial ratio analysis can be used as an assessment for the organization's
stakeholders.
2.7.3 Types of Financial Ratios
According to Munawir (2015), there are four groups of financial ratios, namely:
1. Liquidity ratio is a ratio to determine the company's ability to finance operations
and meet financial obligations when billed.
2. Activity ratio is a ratio to determine the company's ability to carry out daily
company activities or the company's ability to sell, collect receivables and utilize
its assets.
