Which of the following best describes financial ratios?

Financial ratios are mathematical comparisons made between various financial statement accounts or categories. These ratios provide valuable insights into a company’s financial health, performance, and operational efficiency. By analyzing these ratios, stakeholders can assess aspects such as profitability, liquidity, solvency, and efficiency.

For instance, common financial ratios include the current ratio, which compares current assets to current liabilities, and the debt-to-equity ratio, which compares total liabilities to shareholders' equity. These calculations help in understanding how well a company can meet its short-term obligations and how much of its financing comes from debt versus equity.

The other options describe different concepts. Observations on market trends pertain to general economic conditions rather than specific financial analytics. Estimates of future economic conditions deal with forecasting and do not directly relate to the mathematical analysis of current financial statements. Summaries of tax obligations are related to compliance and reporting of tax liabilities, which are not encapsulated in the concept of financial ratios.