Abstract:

 The performance of a company interests many parties, such as the management of the company, the shareholders, prospective investors, lenders, creditors, suppliers, competitors, trade unions, fund managers, investment advisors, and investment banking. Voulgaris et al.,( 2000).  Good performance companies are known as healthy companies and these companies can sustain themselves in the long run. Healthy company refers to company that does not show a sign of business failure (Ahn et al, 2000).  Many past researchers have explored on how financial ratios affect a company’s health. Pearce (2007), Cheng, J.H.(2007), and Rekha Pai, (2004) agree that financial ratios hold promise for providing the early warning signals of business failure.  These indicators are the basis that forms the main financial knowledge of a company.  Understanding which indicators that have a great impact in sustaining a company is thus crucial as these indicators if identified can be used to manage financial knowledge such as alerting companies on their coming problem.  This article attempts to address the importance of financial ratios in determining the financial health of companies. The goal of this paper is to highlight the indicators that have been normally used in predicting healthy company. Recognizing the important indicators will certainly assist managers in managing financial knowledge of their companies effectively.  This study focuses on past researches that consider financial ratios as indicators to predict company health. The findings include a compilation list of financial indicators that have been used and the rank of indicators based on its frequency used and percentage of profit made by companies.  Result of this paper can be used as a guide to existing and emerging companies to plan their strategies especially in dealing with financial issues.