Classification of Ratio

 Classification of Ratio

Classification of Ratio, What is Classification of Ratio
Classification of Ratio

 Ratios are classified according to the need of different interested groups (e.g., shareholders, lenders, investors, management, etc.).

Ratio-: (1) Liquidity Ratio; (2) Solvency Ratio; (3) Activity Ratio; (4) Profitability Ratio.

(1) Liquidity Ratio-: (a) Current Ratio; (b) Liquid Ratio / Quick Ratio / Acid Test Ratio.

(2) Solvency Ratio-: (a) Debt-Equity Ratio; (b) Total Assets to Debt Ratio; (c) Proprietary Ratio; (d) Interest Coverage Ratio.

(3) Activity Ratio-: (a) Inventory Turnover Ratio / Stock Turnover Ratio; (b) Debtors Turnover Ratio; (c) Payable Turnover Ratio / Creditors Turnover Ratio; (d) Working Capital Turnover Ratio.

(4) Profitability Ratio-: (a) Gross Profit Ratio; (b) Net Profit Ratio; (c) Operating Ratio; (d) Operating Profit Ratio.

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