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At Kerry Lehane & Co we know in business, speed matters. The ability to identify growth opportunities early can be the difference between leading the market and playing catch-up. One of the most effective tools for gaining this advantage is the strategic use of financial ratios. By analysing your company’s numbers in the right way, you can uncover trends, spot inefficiencies, and make informed decisions before your competitors see the same picture.

Why Financial Ratios Matter
Financial ratios take raw figures from your accounts and turn them into meaningful insights. They help you compare performance over time, benchmark against competitors, and measure progress towards your goals. The right ratios can highlight strengths to build on and weaknesses to address, giving you a head start in planning your next move.

Key Ratios to Watch
Profitability ratios, such as net profit margin and return on investment, show how effectively you are turning revenue into profit. If your margins are improving faster than the industry average, it may be time to accelerate expansion or invest in marketing to capture a larger market share.

Liquidity ratios, like the current ratio and quick ratio, indicate how easily your business can meet short-term obligations. Strong liquidity compared to competitors can give you the confidence to take advantage of opportunities such as bulk purchasing discounts or acquiring assets at favourable terms.

Efficiency ratios, including inventory turnover and debtor days, reveal how well you manage resources. A lower-than-average debtor days figure, for example, means you collect payments faster than competitors, freeing up cash to reinvest sooner.

Leverage ratios, such as the debt-to-equity ratio, help you understand your business’s financial structure. If you are less reliant on debt than others in your sector, you may be better positioned to borrow for strategic growth without overextending.

Turning Insight into Action
The power of financial ratios lies not just in tracking them, but in acting on what they reveal. Regular monitoring can alert you to shifts in customer behaviour, supplier costs, or operational efficiency. These insights can inform decisions such as launching a new product line, entering a new market, or renegotiating contracts.

A Competitive Edge Through Numbers
Financial ratios are more than a compliance exercise for your accountant. They are a lens through which you can see your business’s potential before others do. By making ratio analysis a routine part of your strategy, you will be ready to seize opportunities quickly, strengthen your market position, and stay one step ahead of the competition.

If you would like to discuss your business needs. Call Kerry Lehane & Co Accountants on 023 8856054 or email info@kerrylehane.com

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