Financial Ratios are mathematical calculations derived from numerical values in a company's financial statements. These ratios are used extensively for analysis and assessment of a company's financial health, performance, and operational efficiency. For example, the Current Ratio, which is the ratio of current assets to current liabilities, provides insights into a company's liquidity and short-term financial health. Another example is the Debt-to-Equity Ratio, which helps in understanding a company's leverage by comparing its debt to its equity. Financial Ratios can be categorized into several types based on what they measure, such as profitability ratios, efficiency ratios, liquidity ratios, and solvency ratios. Each type serves a specific purpose and helps stakeholders make more informed decisions. For instance, Gross Margin Ratio, a profitability ratio, can illustrate how efficiently a company is producing goods relative to its net sales revenue. Overall, these ratios play a crucial role in the fields of financial planning, analysis, and decision-making, assisting stakeholders in determining profitability, liquidity, and financial stability.