A Study Of The Use Of Financial Ratios In Smaller Business Enterprises

Abstract

Entrepreneurs should be aware of the currently high rate of failure for small business firms and the consequent need for well-formulated and strategic planning, implementation and evaluation of the smaller business firm. Many of these basic forms of analysis can be derived from financial statement and reporting disclosures for the smaller business firm. These tools for management planning and decision-making are increasingly available with the use of electronic data processing (EDP) systems in the creation of financial data for a business organization.

Recognizing the need for systematic use and evaluation of these financial data by small business owners, this study focused upon the use of a set of widely discussed financial ratios by a sample group of small business owners in the Chicago metropolitan area.