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Financial Ratio Analysis
A GUIDE TO USEFUL RATIOS FOR UNDERSTANDING YOUR SOCIAL ENTERPRISE’S FINANCIAL PERFORMANCE

December 2013

Ratio Analysis

Acknowledgments
This guide and supporting tools were developed by Julie Poznanski, Bryn Sadownik and Irene Gannitsos as part of the Demonstrating Value Initiative at Vancity Community Foundation. The guide was released in December 2010, with minor updates in December 2013. Further copies of the guide can be downloaded at www.demonstratingvalue.org.

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Ratio Analysis

Contents
Introduction .................................................................................................................................... 1 The Ratios ....................................................................................................................................... 2 Profitability Sustainability Ratios........................................................................................... 2 Operational Efficiency Ratios ................................................................................................ 5 Liquidity Ratios .......................................................................................................................... 7 Leverage Ratios ........................................................................................................................ 9 Other Ratios ........................................................................................................................... 10

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Ratio Analysis

Introduction
A sustainable business and mission requires effective planning and financial management. Ratio analysis is a useful management tool that will improve your understanding of financial results and trends over time, and provide key indicators of organizational performance. Managers will use ratio analysis to pinpoint

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