These ratios are used to find whether the share price is over-valued, under-valued or reasonably valued. Valuation ratios are relative and are generally more helpful in comparing the companies in the same sector. For example, these ratios won’t be of that much use if you compare the valuation ratio of a company in an automobile industry with another company in the banking sector. Here are few of the most important financial ratios to analyze a company.

1. P/E ratio:

Price to earnings ratio is one of the most widely used financial ratio by the investors throughout the world.