Emphasizing the importance of financial statements to understand the overall health of the organization, CA Mahesh said that while investing in stock market it is very important to evaluate the financial performance of the company and compare it with similar companies using ratio analysis, trend analysis, horizontal analysis, vertical analysis. He said in case of banking while sanctioning loan one should take into consideration credit history and important ratios like Net Profit Ratio, Gross Profit Ratio, Net Worth, Debt Equity Ratio, Working Capital Ratio and debt –service coverage ratio. Further he said in case of audit of a company auditors use Product Mix Ratio, Asset Turnover Ratio, and Materiality Ratio etc. for proper analysis.