I am trying to understand what a financial ratio shows.
It's the ratio "Interest cost as a percentage of sales = interest expense/sales"
Can you explain what this shows for a company.
Financial ratios identify the financial strengths and weaknesses of the company. Interest cost as a percentage of sales is a profitability ratio that shows a company's overall efficiency and performance. Interest cost as a percentage of sales depends on interest rates and net revenues of companies. Interest Expense ratio reflects the costs of a company's borrowings. Sometimes companies record a net figure here for interest expense and interest income from invested funds.