Analysis of financial performance

The financial performances of the company are analyzed to determine the financial position of the business. The financial performances are measured with the help of the various financial ratios.  Although, the financial ratio calculation depends on the different factors as one type of business varies significantly with the other types of the business. Therefore, financial ratios are also under criticisms. The financial performance determines how well a business can use assets through primary mode of business and produce revenues. The financial ratios are used as one of the best tool to determine the financial position of the business. The basic forms of the financial ratio are: profitability sustainability ratios, operational efficiency ratios, liquidity ratios, and leverage ratios. The ratios used help to provide the current financial performance of the business.  The reliable results of the financial ratio helps to provide accurate financial information and the information on the performance of companies referring to different period of time. It is also useful to make pertinent comparison of internal benchmarks and goals. The major financial ratios calculated for both companies are the profitability ratios, liquidity ratios, and investment ratios. The other types of financial ratios are also available but, only these three major ratios are undertaken to analyze the financial performance of Easy Jet and Ryanair Ltd. The financial ratios are calculated on the information accessed through the annual reports of the both companies for 2014.