The ratio analysis is made under six broad categories as follows: 1. Liquidity Ratios 2. Leverage Ratios 3. Asset Management Ratios 4. Profitability Ratios 5. Operating Ratios 6. Market based Ratios. Category # 1. Liquidity Ratios: The liquidity ratios measure the liquidity of the firm and its ability to meet its maturing short-term obligations. Liquidity is defined as the ability [...]
In general, financial ratios can be broken down into four main categories: 1. Profitability Ratios 2. Liquidity Ratios 3. Leverage Ratios 4. Activity Ratios. Type # 1. Profitability Ratios: The main objective of any organization is to earn profit. Profit is both a means and end to the organization. The profitability ratios are used to measure how well a business [...]
This article throws light upon the four main types of financial ratios. The types are: 1. Liquidity Ratios 2. Activity Ratios 3. Leverage Ratios 4. Profitability Ratios. Type # 1. Liquidity Ratios: Liquidity ratios reflect the firm's ability to meet scheduled short-term obligations. For the firm to remain alive, it must be able to pay its bills as they become [...]