Explanation:

Developing financial statements is only the first step in assessing the financial health of your business. Next it is important to calculate financial performance measures and compare them to similar businesses or industry standards. The measurement of business performance is more complex and difficult. According to P. C. Tripathi (1991) “The assignment of numerals to characteristics of objects, persons, states or events according to rules about is misused is not the object person state or event itself but some characteristics of it. When objects are courted for example object is not measured in itself but only it’s characteristics of being present. People cannot be measured only their age, height, weight or some other characteristics.” Ratios can be expressed in times, percentage or in pure ratio.