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when we look at financial ratios and their broader interpretations some of the some of the questions that would come to our mind is what do we mean by these ratios why do we need these ratios and in what circumstances do these ratios become really important for us right now a ratio is basically a mathematical number its a relationship between two numbers ideally you would want to have a relationship that comes from a numerator and a denominator now technically you would want these to kind of have denominator yeah technically you would want these to have some sort of a relationship between each other because if there is no relationship then it might just give spurious results so either the numerator should be driving the denominator or the denominator should be driving the numerator right one of these two has to be the driver and the other has to be the variable that gets driven based on a change in the others and then we can identify the trends in the context of finance this assumes