The financial ratios are important because they can tell you a really informative story for the performance and the position of the company. They basically offer a framework that you can use to assess whether the company has good margins, whether it is solvent, if it generates enough cash, if it will be able to meet its obligations as they fall due and whether the financial leverage of the firm is within an acceptable range.
The best part is that you can compare this image with other financial years (its own past) as well as use other companies in the same industry as a benchmark!
The financial ratios can be considered as tool that can help you conduct financial analysis that is easy to follow and above all comparable. Each company is unique and using financial ratios can help you add comparability. Above all, using financial ratios can help you summarize all the information you have available from using the financial statements for example. Of course, using financial ratios should not be used on isolation As mentioned, financial ratios are tools that can help you analyze companies. You should create the context, calculate the applicable ratios and compare the performance and the position of the company with other similar companies.