Ratio means relationship of two different figures with each other. Financial ratios reveal the relations as well as movement of two different financial data with each others. It helps the reader to understand as well as project the future results. Financial results are analysed by various persons like Owners, Investors, Potential Investors, Lenders, Government authorities as well as business associates like Debtors and creditors. Therefore it is very important to have a very healthy Balance sheet and Profit and Loss account. It should be in tune with the local as well as national market trends. If not the financial reports should be transparent enough to clarify the deviations if any.