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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