Micro, Small and Medium Enterprises (MSMEs) serve as the backbone of any developing country contributing significantly to generate employment and exports. Among these MSMEs, manufacturing enterprises particularly in engineering sector plays an important role. This study focuses on financial performance analysis to bridge the gap between theoretical financial standards and their application in real-world scenarios which provide information for policymakers, investors and government. For the present paper financial data from 23 manufacturing engineering MSMEs over a period of ten years was used for 18 different financial ratios to understand their financial health. By systematically analyzing financial ratios the study identifies ideal financial ratio range and compares the same with the industry standards. For this purpose, KMO Bartlet’s test was used to find the financial ratios which best represents the financial health. Further the researcher used paired sample t-test to analyze the calculated ideal ratios with the industry standard which explained that they are 88% correlated and showed a significant positive correlation. Also, most of the engineering enterprises follow the industry standards with some outliers.