What are Financial performance measures ratio?

A financial ratio is a relative magnitude of two selected numerical values taken from a Company's Financial Statements. There are many standard ratiOS that can be used to evaluate the overall financial condition of a company. Financial ratiOS can be used by managers of a firm or shareholders (both current and potential) or banks or anyone else to gauge the financial strength of the company. They can be used also to compare the strengths and weaknesses of two or more organizations.

For Ex: If I were to buy a banking stock from the Indian stock market, I can compare the financial ratiOS of a few of the country's leading banks like ICICI, HDFC, SBI etc and then choose the one which I feel has the most impressive financial background and strengths.