Outrageous Various Types Of Ratio Analysis
Profitability liquidity activity debt and market.
Various types of ratio analysis. They are structural ratios and coverage ratios. There are mainly 4 different types of accounting ratios to perform a financial statement analysis. Liquidity Ratios Solvency Ratios Activity Ratios and Profitability Ratios.
Types of Ratio Analysis. Structural ratios are based on the proportions of debt and equity in the capital structure of the firm whereas coverage ratios are derived from the relationship between debt servicing commitments and sources of funds for meeting theses obligation. Context is required to measure profitability which is provided by ratio analysis.
Ratio analysis consists of calculating financial performance using five basic types of ratios. Gross Profit Ratios Net Profit Ratio Expense ratio etc provide a measure of the profitability of a firm. Financial ratios are the most common and widespread tools used to analyze a business financial standing.
Absolute historical horizontal and budgeted. Four Types of Ratio Analysis are. A few basic types of ratios used in ratio analysis are profitability ratios debt or leverage ratios activity ratios or efficiency ratios liquidity ratios solvency ratios earnings ratios turnover ratios and market ratios.
Ratios are easy to understand and simple to compute. Selection of proper standards of comparison is a most important element in ratio analysis. 2 Evaluation of Operational Efficiency.
The various kinds of financial ratios available may be broadly grouped into the following six silos based on the sets of data they provide. Learning Objectives Classify a financial ratio based on what it measures in a company. The management can use such ratios to find out problem areas and improve upon them.